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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
J.D. EDWARDS & COMPANY
(Name of Subject Company)
J.D. EDWARDS & COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, $0.001 PAR VALUE
(Title of Class of Securities)
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281667105
(CUSIP Number of Class of Securities)
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Robert M. Dutkowsky
President and Chief Executive Officer
J.D. Edwards & Company
One Technology Way
Denver, CO 80237-3000
(303) 334-4000
(Name, address and telephone number of person
authorized to receive notices and communications on
behalf of the person(s) filing statement)
COPIES TO:
---------------------
Herbert P. Fockler
Steve L. Camahort
Jose F. Macias
Jon C. Avina
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300
[ ] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS
MADE BEFORE THE COMMENCEMENT OF A TENDER OFFER
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is J.D. Edwards & Company, a Delaware
corporation ("J.D. Edwards" or the "Company"). The address of the principal
executive office of the Company is One Technology Way, Denver, Colorado 80237,
and its telephone number is (303) 334-4000.
The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (this "Schedule 14D-9"
or "Statement") relates is the common stock, $0.001 par value, of the Company
(including the associated stock purchase rights pursuant to J.D. Edwards' rights
agreement) (the "Common Stock"). Unless the context otherwise requires, as used
herein, the term "Shares" shall mean shares of Common Stock. As of May 28, 2002,
there were 122,426,664 Shares issued and outstanding.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON
The filing person of this Statement is the subject company, J.D. Edwards.
The business address and telephone number of J.D. Edwards are as set forth in
Item 1 above.
This Statement relates to the offer by PeopleSoft, Inc., a Delaware
corporation ("PeopleSoft"), through its wholly owned subsidiary, Jersey
Acquisition Corporation, a Delaware Corporation (the "Purchaser"), disclosed in
a Tender Offer Statement on Schedule TO (the "Schedule TO"), dated June 19,
2003, to exchange each outstanding Share for (i) cash, (ii) a fraction of a
share of PeopleSoft common stock, par value $0.01 per share ("PeopleSoft Common
Stock") or (iii) a combination of cash and PeopleSoft Common Stock, in each case
having a value, on a per share basis of $7.05 plus 0.43 of a share of PeopleSoft
Common Stock, allocated by prorating the cash and shares of PeopleSoft Common
Stock available in the offer among the elections made by J.D. Edwards
stockholders, upon the terms and subject to the conditions set forth in the
prospectus contained in the registration statement on Form S-4 filed by
PeopleSoft with the Securities and Exchange Commission (the "SEC") on June 19,
2003 (the "Prospectus") and in the related Letter of Transmittal. Holders of
Shares may elect to receive the offer consideration all in cash or PeopleSoft
Common Stock for their J.D. Edwards Common Stock. Holders of Shares who tender
but do not make an election will receive an allocation of the remaining cash and
PeopleSoft Common Stock, or a combination of cash and stock, after allocating
the cash and PeopleSoft Common Stock among the elections made in the offer. The
election and proration procedures are described below and in the Prospectus.
Holders of Shares who do not tender in the offer will receive $7.05 plus 0.43 of
a share of PeopleSoft Common Stock for each Share in the merger following
completion of the offer. The value of the stock consideration to be paid to
tendering holders of Shares will be determined by the average closing price of a
share of PeopleSoft Common Stock for the five trading days ending immediately
before the second trading day prior to the expiration date. Two trading days
prior to expiration of the offer, PeopleSoft will issue a press release
announcing the value of the cash and stock consideration.
The offer is being made pursuant to the Amended and Restated Agreement and
Plan of Merger and Reorganization, dated as of June 16, 2003 (the "Merger
Agreement"). The Merger Agreement provides that, following the acquisition of
the shares of J.D. Edwards pursuant to the offer the Purchaser will merge with
and into J.D. Edwards with J.D. Edwards continuing in existence as the surviving
corporation. After the first merger, J.D. Edwards will merge with and into
PeopleSoft or a wholly owned subsidiary of PeopleSoft in a second merger. It is
possible, however, that the acquisition of J.D. Edwards will be effected using
an alternative structure as described in the section entitled "The Merger
Agreement -- The Alternative Double Merger" in the Prospectus, which is
incorporated herein by reference.
Under the terms of the Merger Agreement, at the effective time of the
merger, each issued and outstanding Share that was not tendered into the offer
and accepted by PeopleSoft in the offer (other than those shares held by J.D.
Edwards or any of its subsidiaries, PeopleSoft or the Purchaser or any of
PeopleSoft's wholly owned subsidiaries and dissenting shares) will be converted
into the right to receive $7.05, net, in cash, and 0.43 shares of PeopleSoft
Common Stock, without interest. All Shares owned by
J.D. Edwards or any of its subsidiaries, PeopleSoft or the Purchaser or any of
PeopleSoft's other wholly owned subsidiaries will be automatically canceled and
retired and will cease to exist.
MAKING THE ELECTION AND THE PRORATION RULES
Making the Election. PeopleSoft has included a Letter of Transmittal with
the Prospectus. The Letter of Transmittal is used to make the election to
receive PeopleSoft Common Stock, cash, or, in the case of proration, a
combination of PeopleSoft Common Stock and cash in exchange for Shares tendered
pursuant to the offer. See the section of the Prospectus entitled "The
Offer -- Making the Election," which is incorporated herein by reference, for
more information.
The Proration Rules. The proration rules that will govern the allocation
of the cash and stock consideration in the offer and the subsequent merger will
be applied as set forth in the following examples. The proration calculations
are complex, PeopleSoft has provided a set of examples based on certain
assumptions to help you understand how the proration will work. The actual
proration will depend upon the mix of elections and the average closing price of
the PeopleSoft Common Stock.
KEY ASSUMPTIONS:
- TOTAL NUMBER OF SHARES OUTSTANDING, AS OF THE MERGER
AGREEMENT = 122,426,664
- MAXIMUM NUMBER OF PEOPLESOFT COMMON STOCK ISSUABLE (FOR 100% OF
SHARES) = 0.43 X 122,426,664 = 52,643,466
- TOTAL AMOUNT OF CASH ISSUABLE (FOR 100% OF
SHARES) = 122,426,664 X $7.05 = $863,107,981
- AVERAGE CLOSING PRICE OF PEOPLESOFT COMMON STOCK = $17.00
- RESULTING CASH OFFER PRICE = $7.05 + 0.43 X $17.00 = $14.36
- RESULTING STOCK OFFER PRICE = $14.36 / $17.00 = APPROXIMATELY 0.8447X
The average closing price is equal to the average closing price of
PeopleSoft Common Stock as reported on the Nasdaq National Market for the five
consecutive trading days immediately prior to (and excluding) the second trading
day before the expiration of the offer. The cash offer price is equal to
$7.05 + 0.43 X average closing price. The stock offer price is equal to the cash
offer price divided by the average closing price.
Assume in the following examples that 95% of the Shares are tendered. The
consideration for distribution in the offer will be set forth below.
- The total number of Shares tendered is 122,426,664 X 95% = 116,305,331.
- The total amount of shares of PeopleSoft Common Stock that can be issued
to accepted Shares = 122,426,664 X 0.43 X 95% is 50,011,292 shares.
- The total amount of cash issuable to accepted
Shares is 122,426,664 X $7.05 X 95% = $819,952,582.
CASE 1: 60% OF THOSE THAT TENDER ELECTED CASH AND 40% OF THOSE THAT TENDER
ELECTED STOCK.*
Resulting Consideration Paid
- Those J.D. Edwards shareholders electing stock receive full consideration
in PeopleSoft Common Stock.
-- The maximum number of Shares that could be paid in stock in the
offer is 0.43 X 116,305,331 / 0.8447 = 59,205,981.
-- The number of Shares electing stock is
116,305,331 X 40% = 46,522,132.
- This number is less than the maximum number of Shares that could
be paid in stock (46,522,132 < 59,205,981).
* Note: All calculations are rounded to the nearest whole number. Figures may
not add exactly due to rounding.
2
- As a result, every stock-electing Share receives its full
consideration in PeopleSoft Common Stock. Every stock-electing
Share will receive, 0.8447 of a share of PeopleSoft Common Stock,
which represents a value of $14.36 (0.8447 X $17.00 = $14.36).
- Those Shares electing cash will receive partial consideration in cash and
partial consideration in PeopleSoft Common Stock.
-- The maximum number of Shares that could be paid in cash in the offer
is $7.05 X 116,305,331 / $14.36 = 57,099,762.
-- The number of Shares electing cash is 116,305,331 X 60% = 69,783,198.
- The number of Shares electing cash (69,783,198) exceeds the maximum
number of Shares that could be paid in cash (57,099,762).
- Therefore, only 81.8% (57,099,762 / 69,783,198 = 81.8%) of the
requested amount can be delivered as cash consideration to those
J.D. Edwards stockholders electing cash.
-- Each cash-electing share will receive 81.8% of the cash offer price
of $14.36, or $11.75.
-- The remaining consideration must be delivered in PeopleSoft Common
Stock equal to 0.8447 X (1-0.818) = 0.1535 of a share of PeopleSoft
Common Stock.
-- Each cash electing share will receive 0.1535 of a share of PeopleSoft
Common Stock in addition to the $11.75 in cash to deliver the full
$14.36 of consideration.
CASE 2: 40% OF THOSE THAT TENDER ELECTED CASH AND 60% OF THOSE THAT TENDER
ELECTED STOCK.*
Resulting Consideration Paid
- Those Shares electing stock receive partial consideration in PeopleSoft
Common Stock and partial consideration in cash.
-- The number of Shares electing stock is 116,305,331 X 60%, or
69,783,198.
- This number is greater than the maximum number of Shares that
could be paid stock (69,783,198 > 59,205,981).
- Every stock-electing Share will therefore receive a portion of
the full $14.36 consideration in cash.
- Every stock-electing Share will therefore receive 0.7167 of a
share of PeopleSoft Common Stock (59,205,981 / 69,783,198 X stock
offer price of 0.8447 = 0.7167) which represents a value of
$12.18 (0.7167 X $17.00 = $12.18).
- The remaining consideration equal to the cash offer price of
$14.36 X (1 - 0.848) = $2.18 must therefore be delivered in cash
in order to meet the required $14.36 value per Share.
- Those Shares electing cash receive full consideration in cash.
-- The number of tendering Shares electing cash is 116,305,331 X 40%,
or 46,522,132.
- This number is less than the maximum number of Shares that could
be paid in cash (46,522,132 < 57,099,762).
- Therefore, each cash-electing Share will receive the full $14.36
of consideration in cash.
3
CASE 3: 60% OF THOSE THAT TENDER ELECTED CASH, 20% OF THOSE THAT TENDER ELECTED
STOCK, AND 20% OF THOSE THAT TENDER MADE NO ELECTION.*
Resulting Consideration Paid
- Those Shares electing stock receive full consideration in PeopleSoft
stock.
-- The number of Shares tendering and electing stock is
116,305,331 X 20%, or 23,261,066.
-- This number is less than the maximum number of Shares that can be
paid in stock (23,261,066 < 59,205,98 ), so all those stock-electing
Shares receive full consideration in PeopleSoft Common Stock.
-- For each Share tendered, 0.8447 of a share of PeopleSoft Common Stock
will be issued (0.8447 X $17.00) to deliver the full $14.36 of
consideration.
- Those Shares electing cash receive partial consideration in cash and
partial consideration in PeopleSoft Common Stock.
-- The number of Shares electing cash is 116,305,331 X 60%, or
69,783,198.
-- This number exceeds the maximum number of Shares that could be paid
in cash (69,783,198 > 57,099,762).
-- Therefore, only 81.8% (57,099,762/69,783,198) of the requested amount
can be delivered as consideration to those J.D. Edwards stockholders
electing cash.
-- Each cash-electing Share will receive 81.8% of the cash offer price
of $14.36, or $11.75.
-- The remaining consideration must be delivered in PeopleSoft Common
Stock equal to 0.8447 X (1 - 0.818) = 0.1535 of a PeopleSoft Common
Stock.
-- Each cash-electing Share will therefore receive 0.1535 of a share of
PeopleSoft Common Stock (worth $2.61) in addition to the $11.75 in
cash to deliver the full $14.36 of consideration.
- Tendered but non-electing Shares receive full consideration in PeopleSoft
Common Stock.
-- Under this scenario, 23,261,066 Shares have not elected a
consideration preference (116,305,331 X 20%).
-- Those non-electing Shares will each receive 0.8447 of a share of
PeopleSoft Common Stock.
CASE 4: 40% OF THOSE THAT TENDER ELECTED CASH, 40% OF THOSE THAT TENDER ELECTED
STOCK, AND 20% OF THOSE THAT TENDER MADE NO ELECTION.*
Resulting Consideration Paid
- Those Shares electing stock receive full consideration in PeopleSoft
Common Stock.
-- The number of Shares tendering and electing stock is
116,305,331 X 40% = 46,522,132.
-- This number is less than the maximum number of Shares that can be
paid in stock (46,522,132 < 59,205,981), so all those stock-electing
Shares receive full consideration in PeopleSoft Common Stock.
-- For each Share tendered, 0.8447 of a new PeopleSoft share will be
issued (0.8447 X $17.00) to deliver the full $14.36 of consideration.
-- The number of PeopleSoft Common Stock to be issued for these Shares
is 39,297,245.
- Those Shares electing cash receive full consideration in cash.
-- The number of Shares electing cash is 116,305,331 X 40%, or
46,522,132.
4
-- This number is less than the maximum number of Shares that could be
paid in cash (46,522,132 < 57,099,762).
-- Therefore each cash-electing Share will receive the full
consideration of $14.36 in cash.
-- The amount of cash paid for these Shares is $668,057,815.
- Tendered but non-electing Shares receive partial consideration in cash
and partial consideration in PeopleSoft Common Stock.
-- The number of Shares who tendered but did not make an election is
116,305,331 X 20% = 23,261,066.
-- Under this scenario, $151,894,762 in cash remains for issuance
($819,952,582 - $668,057,815).
-- Under this scenario, 10,714,047 shares of PeopleSoft Common Stock
remain for issuance (50,011,292 - 39,297,245).
-- $151,894,761 and 10,714,047 shares of PeopleSoft Common Stock will
be allocated among the 23,261,066 Shares which have been tendered
but no election was made, as follows:
-- $151,894,767 / 23,261,066 = $6.53; and
-- 10,714,047 / 23,261,066 = 0.4606 of a share of PeopleSoft Common
Stock.
-- Therefore, each Share that has been tendered but for which no
election was made will be exchanged for $6.53 plus 0.4606 of a
share of PeopleSoft Common Stock (with a value of 0.4606 X
$17 = $7.83) for a total consideration with a value of $14.36.
As discussed above, the average closing price for purposes of allocating
the offer consideration will be determined by the average closing price of
PeopleSoft Common Stock as reported on the Nasdaq National Market for the five
consecutive trading day period ending immediately prior to (and excluding) the
second trading day before the expiration of the offer.
The following table illustrates the allocation of the offer consideration
for the different values of PeopleSoft Common Stock based on the four examples
above for the different percentages of cash-electing shares, stock-electing
shares and non-electing shares.
<Table>
<Caption>
60% CASH/40% STOCK-ELECTING SHARES 40% CASH/60% STOCK-ELECTING SHARES
------------------------------------ ------------------------------------
EACH CASH-ELECTING EACH STOCK- EACH CASH-ELECTING EACH STOCK-
AVERAGE CASH STOCK SH. ELECTING SH. SH. ELECTING SH.
CLOSING OFFER OFFER ------------------ --------------- ------------------ ---------------
PRICE PRICE PRICE CASH STOCK CASH STOCK CASH STOCK CASH STOCK
- ------- ------ ----- -------- ------- ------ ------ -------- ------- ------ ------
$10.00 $11.35 1.135x $11.35 0.000x $0.60 1.075x $11.35 0.000x $4.18 0.717x
$11.00 $11.78 1.071x $11.75 0.003x $0.00 1.071x $11.78 0.000x $3.90 0.717x
$12.00 $12.21 1.018x $11.75 0.038x $0.00 1.018x $12.21 0.000x $3.61 0.717x
$13.00 $12.64 0.972x $11.75 0.068x $0.00 0.972x $12.64 0.000x $3.32 0.717x
$14.00 $13.07 0.934x $11.75 0.094x $0.00 0.934x $13.07 0.000x $3.04 0.717x
$15.00 $13.50 0.900x $11.75 0.117x $0.00 0.900x $13.50 0.000x $2.75 0.717x
$16.00 $13.93 0.871x $11.75 0.136x $0.00 0.871x $13.93 0.000x $2.46 0.717x
$17.00 $14.36 0.845x $11.75 0.154x $0.00 0.845x $14.36 0.000x $2.18 0.717x
$18.00 $14.79 0.822x $11.75 0.169x $0.00 0.822x $14.79 0.000x $1.89 0.717x
$19.00 $15.22 0.801x $11.75 0.183x $0.00 0.801x $15.22 0.000x $1.60 0.717x
$20.00 $15.65 0.783x $11.75 0.195x $0.00 0.783x $15.65 0.000x $1.32 0.717x
$21.00 $16.08 0.766x $11.75 0.206x $0.00 0.766x $16.08 0.000x $1.03 0.717x
$22.00 $16.51 0.750x $11.75 0.216x $0.00 0.750x $16.51 0.000x $0.74 0.717x
$23.00 $16.94 0.737x $11.75 0.226x $0.00 0.737x $16.94 0.000x $0.46 0.717x
$24.00 $17.37 0.724x $11.75 0.234x $0.00 0.724x $17.37 0.000x $0.17 0.717x
$25.00 $17.80 0.712x $11.75 0.242x $0.00 0.712x $17.63 0.007x $0.00 0.712x
</Table>
5
<Table>
<Caption>
60% CASH/20% STOCK/20% NON-ELECTING SHARES
--------------------------------------------------------------------
EACH STOCK-ELECTING
AVERAGE CASH STOCK EACH CASH-ELECTING SH. SH. EACH NON-ELECTING SH.
CLOSING OFFER OFFER ---------------------- ------------------- ---------------------
PRICE PRICE PRICE CASH STOCK CASH STOCK CASH STOCK
- ------- ------ ----- ---------- --------- -------- -------- --------- ---------
$10.00 $11.35 1.135x $11.35 0.000x $0.60 1.075x $0.60 1.075x
$11.00 $11.78 1.071x $11.75 0.003x $0.00 1.071x $0.00 1.071x
$12.00 $12.21 1.018x $11.75 0.038x $0.00 1.018x $0.00 1.018x
$13.00 $12.64 0.972x $11.75 0.068x $0.00 0.972x $0.00 0.972x
$14.00 $13.07 0.934x $11.75 0.094x $0.00 0.934x $0.00 0.934x
$15.00 $13.50 0.900x $11.75 0.117x $0.00 0.900x $0.00 0.900x
$16.00 $13.93 0.871x $11.75 0.136x $0.00 0.871x $0.00 0.871x
$17.00 $14.36 0.845x $11.75 0.154x $0.00 0.845x $0.00 0.845x
$18.00 $14.79 0.822x $11.75 0.169x $0.00 0.822x $0.00 0.822x
$19.00 $15.22 0.801x $11.75 0.183x $0.00 0.801x $0.00 0.801x
$20.00 $15.65 0.783x $11.75 0.195x $0.00 0.783x $0.00 0.783x
$21.00 $16.08 0.766x $11.75 0.206x $0.00 0.766x $0.00 0.766x
$22.00 $16.51 0.750x $11.75 0.216x $0.00 0.750x $0.00 0.750x
$23.00 $16.94 0.737x $11.75 0.226x $0.00 0.737x $0.00 0.737x
$24.00 $17.37 0.724x $11.75 0.234x $0.00 0.724x $0.00 0.724x
$25.00 $17.80 0.712x $11.75 0.242x $0.00 0.712x $0.00 0.712x
</Table>
The Schedule TO states that the principal executive offices of PeopleSoft
and the Purchaser are located at 4460 Hacienda Drive, Pleasanton, California,
94588.
ITEM 3. PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
Certain contracts, agreements, arrangements or understandings between the
Company or its affiliates with certain of its directors and executive officers
are, except as noted below, described in the Information Statement pursuant to
Rule 14f-1 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") that is attached as Annex A and Exhibit (a)(4) hereto (the "Information
Statement") and are incorporated herein by reference. Except as described or
referred to herein and in Annex A, to the knowledge of the Company, as of the
date hereof, there are no material agreements, arrangements or understandings,
or any actual or potential conflicts of interest, between the Company or its
affiliates and (1) the Company, its executive officers, directors or affiliates
or (2) PeopleSoft or the Purchaser, their respective officers, directors or
affiliates.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors of the Company
(the "Board of Directors" or "Board") set forth in Item 4 below, the Company's
stockholders should be aware that certain executive officers of the Company and
certain members of the Board of Directors have interests in the merger, which
are described herein and in Annex A hereto, that differ from those of other
stockholders of J.D. Edwards, as described below. The Board of Directors was
aware of these matters and considered them in approving the original merger
agreement and the merger and, subsequently, the offer and the Merger Agreement,
and recommending that the J.D. Edwards stockholders accept the offer, tender
their Shares and approve the merger and the Merger Agreement.
In connection with the original merger agreement, each of the directors and
executive officers of J.D. Edwards entered into a voting agreement with
PeopleSoft and the Purchaser in which he or she has agreed, among other things,
to vote all Shares beneficially owned by him or her in favor of, among other
things, the Merger Agreement and the merger and against other acquisition
proposals. The voting agreements were not changed in connection with the
negotiation of the Merger Agreement; however, approval of the stockholders of
J.D. Edwards is not required to complete the offer.
Change in Control Plan/Severance Agreements. J.D. Edwards maintains a
management change in control plan, adopted in 1999, which provides for specified
severance and other change in control-related benefits to participants in the
plan. The plan covers 197 management employees. In connection with the approval
of the original merger agreement, the Board of Directors agreed to amend this
plan in certain respects. The amendments to the plan are contingent upon the
closing of the merger. No further amendment to the plan was made or agreed to in
connection with the Merger Agreement.
6
As amended, a participant in the plan is entitled, among other benefits as
described below, to be paid (1) 25% of the severance payment determined as
described below as of the closing, (2) 25% of the severance payment amount if he
or she remains an employee of J.D. Edwards or an affiliate 12 months after
closing, and (3) an additional 50% of the severance payment amount, plus the 25%
otherwise due 12 months after closing if not already paid, if the employee is
involuntarily terminated or is terminated without cause within 15 months of a
change of control. In addition, a participant who is terminated without cause
immediately upon the closing generally will receive the entire severance payment
and other benefits provided under the plan prior to its amendment at that time.
A change in control under the plan includes the consummation of a merger or
consolidation with another company, and would include the proposed merger
between PeopleSoft and J.D. Edwards described in the Prospectus. Under the plan
as amended pursuant to the original merger agreement, involuntary termination
includes:
- a significant reduction of the participant's title, duties or
responsibilities relative to those in effect immediately prior to the
reduction excluding any reasonable changes that are the direct and
necessary result of J.D. Edwards becoming a subsidiary in a larger
controlled group of corporations;
- a reduction in the annual base salary or in the maximum dollar amount of
potential annual cash bonuses relative to the annual base salary and
maximum dollar amount of potential annual cash bonuses as in effect
immediately prior to the reduction, unless after the reduction the
participant's annual base salary and potential annual cash bonus remain
within the range of annual salaries and cash bonuses for
similarly-situated employees of PeopleSoft or its affiliates;
- a failure by PeopleSoft to provide the participant with an employee
benefits package that is substantially comparable in the aggregate to the
employee benefits package provided to all employees of PeopleSoft or its
affiliates who are of a similar rank or level as the participant; or
- the relocation of the participant to a facility or a location more than
50 miles from the participant's then present location, provided that
participant's commute is longer in miles as a result of the relocation
compared to the participant's commute to the current location.
In any event, PeopleSoft would have a 30-day period to cure any purported
involuntary termination, and a participant will not be entitled to severance
benefits unless he or she actually terminates employment with PeopleSoft.
In addition, a participant in the plan is deemed to be terminated without
cause if he or she is terminated by PeopleSoft other than as the result of (1) a
material act of dishonesty by the participant in connection with the
participant's employment with PeopleSoft; (2) the participant's conviction of,
or plea of nolo contendere to, a felony; (3) the participant's failure to
perform reasonably assigned duties after the participant has received a written
demand for performance which includes reasonable detail describing his or her
nonperformance; (4) the participant's material breach of his or her obligations
as an officer/employee of PeopleSoft; or (5) the participant's failure to
materially comply with PeopleSoft's policies. In any event, a participant would
have a 30-day period to cure any purported event under (3), (4) or (5) above.
A participant's severance payment under the plan equals the sum of (1) a
specified severance percentage, which is defined as 100%, 200% or 300% of the
sum of the participant's annual base salary and the average of the bonuses
received by such individual over the preceding three years, plus (2) a prorated
portion of his or her quarterly and annual bonus and variable compensation
amount. In addition, a participant who is terminated without cause or who
suffers an involuntary termination within 15 months of closing is entitled to
continuation of specified employee benefits until the earlier of (1) six months
after the date of termination or (2) the date the participant becomes covered by
a comparable plan of another employer and job outplacement services for up to
six months after termination up to $10,000. All payments under the plan are
conditioned upon the participant executing a release of claims in favor of
PeopleSoft and its affiliates. The total potential liability of PeopleSoft under
the plan is approximately $53 million.
7
Of the 197 participants in the plan, six, including Richard Allen, Harry
Debes, Mark Endry, Michael Madden, Richard Mathews, and Leslie Wyatt, are
entitled to severance percentages of 300%, 43 are entitled to severance
percentages of 200% and the remaining 148 are entitled to severance percentages
of 100%. In connection with the execution of the original merger agreement,
Robert Dutkowsky, Richard Allen and Richard Snow agreed to amend their
agreements subject to the completion of the merger and are entitled to the
amount of severance benefits described immediately below.
Employment Agreements. Mr. Dutkowsky, President and Chief Executive
Officer of J.D. Edwards, has agreed to amend his employment agreement. He will
continue to serve as a consultant to the surviving corporation for up to six
months after the merger subject to the completion of the merger. In lieu of any
other severance benefits, including those otherwise payable under the management
change in control plan, he will receive cash payments of $650,000 on the closing
of the merger, and $1.95 million at the end of the six-month transition period.
He will be entitled to the acceleration of all of his unvested options and
restricted stock and specified additional payments intended to offset any excise
tax liabilities under Section 280G of the Internal Revenue Code to which Mr.
Dutkowsky may be subject as a result of the severance payments made to him in
connection with the merger. Mr. Dutkowsky will be subject to a PeopleSoft
non-competition and non-solicitation agreement during the term of his employment
and for a period of one year following the termination of his employment.
Mr. Allen, Executive Vice President, Finance and Administration, and Chief
Financial Officer of J.D. Edwards, similarly has agreed to amend his employment
agreement subject to the completion of the merger and is expected to be retained
for a six-month transition period. He will be entitled to total cash payments
under the plan of approximately $1.8 million, 25% of which will be payable at
closing of the merger and the remaining 75% payable upon his termination of
employment. Mr. Allen will be subject to a PeopleSoft non-competition and
non-solicitation agreement during the term of his employment and for a period of
one year following the termination of his employment.
Mr. Snow, Vice President, General Counsel and Secretary of J.D. Edwards,
also has agreed to amend his employment agreement subject to the completion of
the merger and is expected to be retained for a period of approximately six
months following the closing. He will be entitled to total cash payments under
the plan of $456,248, 25% of which will be payable at closing of the merger and
the remaining 75% payable upon his termination of employment. Mr. Snow will be
subject to a PeopleSoft non-competition and non-solicitation agreement during
the term of his employment and for a period of one year following the
termination of his employment.
A total of 47 other employees, including the remainder of the J.D. Edwards
executive officers, have entered into substantially similar offer letters that
amend their employment agreements. Pursuant to those offer letters, they
generally will be at-will employees of PeopleSoft, will be entitled to benefits
under the plan as described above, may receive additional PeopleSoft options and
will be subject to the standard PeopleSoft non-competition and non-solicitation
agreement during the term of their employment and for a period of one year, and
with regard to the non-solicitation of employees, six months following their
voluntary termination or termination for cause.
Acceleration of Stock Options. Under the J.D. Edwards 1992 Incentive Stock
Option Plan, 1997 Equity Incentive Plan and 2003 Equity Incentive Plan, if any
individual is involuntarily terminated as a result of the merger, the awards
granted to that individual under the plan are accelerated in full and become
100% vested. Under the YOUcentric, Inc. 2000 Equity Compensation Plan, assumed
by J.D. Edwards, if an optionholder is involuntarily terminated within 12 months
of a change of control, including the proposed merger, the options granted under
that plan are accelerated in full and become 100% vested.
Post-Merger Board Membership. As of the effective time of the merger,
PeopleSoft will amend its Bylaws to increase the size of its board to eight
members, and one of J.D. Edwards' directors, Michael J. Maples, will be
designated to serve as a Class I director of PeopleSoft and a member of the
PeopleSoft's board's Corporate Governance/Nominating Committee.
8
Indemnification. The Merger Agreement provides that, after the effective
time of the merger, to the extent not covered by insurance and as permitted by
law, PeopleSoft shall, or shall cause the surviving corporation to, indemnify
and hold harmless persons who were directors or officers of J.D. Edwards prior
to the effective time of the merger against all liabilities or losses arising
out of or in connection with any claim, demand, action, suit, proceeding or
investigation based or arising in whole or in part out of the fact that the
person was a director or officer of J.D. Edwards (whether or not relating to any
matter existing or occurring at or prior to the effective time of the merger and
whether or not asserted or claimed prior to, at or after the effective time of
the merger), including, to the extent not prohibited by law, indemnification for
negligent acts or omissions by an indemnified person. In addition, PeopleSoft
has agreed to cause the surviving corporation to fulfill and honor all
obligations of J.D. Edwards under any indemnification agreements between J.D.
Edwards and its directors and officers and the indemnification provisions of
J.D. Edwards' certificate of incorporation and bylaws as in effect immediately
before the merger. PeopleSoft also agrees not to permit the surviving
corporation to merge or consolidate with any other person unless the surviving
corporation will ensure that the surviving or resulting entity assumes the
indemnification obligations in the Merger Agreement.
PeopleSoft has agreed to maintain in effect, or cause the surviving
corporation to maintain in effect, for a period of six years after the effective
time of the merger if available, directors' and officers' liability insurance
covering those persons who are covered by J.D. Edwards' directors' and officers'
liability insurance policy as of immediately prior to the effective time of the
merger, on terms no less favorable to those persons than those of J.D. Edwards'
existing directors' and officers' liability insurance policy. However, neither
PeopleSoft nor the surviving corporation, as the case may be, is required to
expend an amount in excess of 200% of the current premium paid by J.D. Edwards
in any one year. If the aggregate expenditure on coverage exceeds that amount,
PeopleSoft will use commercially reasonable efforts to purchase as much
insurance as can be obtained for that amount. Instead of maintaining the
existing insurance, PeopleSoft may cause coverage to be provided under any
policy maintained for the benefit of PeopleSoft or its subsidiaries on terms
materially no less favorable to the intended beneficiaries as the existing
insurance.
Transfers Under Rule 144. The issuance of PeopleSoft Common Stock in
connection with the offer and the merger will increase the number of shares of
outstanding PeopleSoft Common Stock and is expected to result in greater share
trading volume, which will affect the Rule 144 volume limitations that apply to
affiliates of the combined company and former affiliates of J.D. Edwards. This
increase in the number of shares of outstanding PeopleSoft Common Stock may
facilitate broader transfers of shares by affiliates.
As a result of these interests, J.D. Edwards directors and officers may
have reasons for tendering their Shares and, if voting to adopt the Merger
Agreement and approve the merger that are not the same as J.D. Edwards
stockholders' interests. J.D. Edwards stockholders should consider whether these
interests may have influenced these directors and officers to support or
recommend the offer and the merger.
THE MERGER AGREEMENT
A summary of the material terms of the Merger Agreement in the section
entitled "The Merger Agreement" in the Prospectus attached as Exhibit (a)(1) to
this Statement is incorporated herein by reference. The summary is qualified in
its entirety by reference to the complete text of the Merger Agreement, which
has been filed as Exhibit (e)(1) hereto and is incorporated herein by reference.
AGREEMENTS RELATED TO THE MERGER
A summary of the material terms of the J.D. Edwards Stockholder Voting
Agreements, the form of which is attached as Exhibit C to the Merger Agreement,
and the J.D. Edwards Affiliate Agreements, the form of which is attached as
Exhibit B to the Merger Agreement, is found in the section entitled "Agreements
Related to the Merger" in the Prospectus attached as Exhibit (a)(1) to this
Statement and is incorporated herein by reference. The summary is qualified in
its entirety by reference to the complete
9
text of the agreements, which have been filed as part of Exhibit (e)(1) hereto
and is incorporated herein by reference.
EXISTING INDEMNIFICATION; DIRECTORS AND OFFICERS' INSURANCE
The J.D. Edwards amended and restated certificate of incorporation
eliminates the personal liability of, and provides a right to indemnification
to, each of the current and former directors and officers to the fullest extent
authorized or permitted by Delaware General Corporation Law. However, if the
Delaware General Corporation Law is amended to further eliminate or limit
director liability, then the indemnification provided shall be expanded to the
fullest extent permitted by the Delaware General Corporation Law as amended.
J.D. Edwards will advance fees for defense of an indemnified director or
officer, upon receipt of an undertaking that the advance will be repaid if it is
ultimately determined that the director or officer is not entitled to
indemnification. The J.D. Edwards amended and restated certificate of
incorporation and bylaws also permit the Board of Directors to provide for
indemnification of employees and agents of J.D. Edwards with the same scope and
effect as the indemnification provided for directors and officers, provided that
J.D. Edwards is not required to advance fees for the defense of indemnified
employees or agents. This right to indemnification is not exclusive of any other
right the director, officer, employee or agent may have.
Even if J.D. Edwards is prohibited from indemnifying a person under
Delaware General Corporation Law, it may maintain insurance at the corporation's
expense to protect itself and any director, officer, employee or agent against
an expense, liability or loss.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(A) SOLICITATION/RECOMMENDATION
At a meeting held on June 15, 2003, the members of the Board of Directors
voted to approve the Merger Agreement and the transactions contemplated thereby,
including the offer and the merger, and determined that the Merger Agreement,
the offer and the merger are fair to and in the best interests of the
stockholders of J.D. Edwards. The Board also authorized the senior members of
the Company's management to finalize and execute the Merger Agreement on behalf
of the Company. The J.D. Edwards directors unanimously voted to recommend that
the J.D. Edwards stockholders accept the offer. A letter to J.D. Edwards
stockholders communicating the Board's recommendation is filed as Exhibit (a)(3)
hereto and is incorporated herein by reference.
(B) BACKGROUND OF THE OFFER; REASONS FOR RECOMMENDATION
BACKGROUND OF THE OFFER
As a regular part of their business plans, PeopleSoft and J.D. Edwards have
from time to time each considered opportunities for expanding and strengthening
their respective technology, products, research and development capabilities and
distribution channels, including strategic acquisitions, business combinations,
investments, licensing and development agreements and joint ventures.
Although PeopleSoft and J.D. Edwards did not have any prior business
understandings or relationships, during the past several years, PeopleSoft's
senior management and that of J.D. Edwards have made periodic inquiries to each
other regarding whether a strategic transaction between the parties would be
mutually beneficial.
In November 1998, members of PeopleSoft's senior management met with
members of senior management of J.D. Edwards to discuss a potential business
combination between PeopleSoft and J.D. Edwards. During the winter of 2000, and
again in the fall of 2001, additional meetings were held to discuss a potential
strategic transaction between the parties, but no agreements were reached.
On or about June 5, 2002, Craig Conway, PeopleSoft's President and Chief
Executive Officer, contacted Larry Ellison, Oracle Corporation's Chairman and
Chief Executive Officer, to determine whether Oracle would be interested in
selling its enterprise
10
applications business to PeopleSoft. On that date, Oracle and PeopleSoft entered
into a mutual nondisclosure agreement. On the following day, June 6, 2002, Ram
Gupta, Peter Gassner, Rick Bergquist and Kevin Parker, PeopleSoft's Chief
Financial Officer, met in person with Safra Cruz, the Executive Vice President
of Oracle, and other representatives of Oracle, to discuss the matter. The
parties were unable to agree on the terms of any potential sale of Oracle's
enterprise applications business to PeopleSoft. Shortly thereafter, Mr. Conway
and Mr. Ellison had a brief telephone conversation in which they concluded that
they could not agree on mutually acceptable terms to such a transaction. There
have been no further discussions between Oracle and PeopleSoft on this subject
since that time.
In October and November 2002, senior members of PeopleSoft's management and
that of J.D. Edwards met to further explore a potential transaction between the
parties.
On November 25, 2002, the Board of Directors met and explored options to
enhance stockholder value, including, continuing on its then current track,
consolidation with other mid-market players, changing its business model or
pursuing an upstream merger. Mr. Dutkowsky advised the Board of the meetings
held with PeopleSoft.
On December 18, 2002, a representative of Citigroup, at PeopleSoft's
request, presented an overview of the potential business combination with J.D.
Edwards to members of PeopleSoft's senior management.
On December 18, 2002, the Board of Directors met and again explored options
to enhance stockholder value and the board authorized further discussions and
due diligence concerning a merger with PeopleSoft. On December 20, 2002, J.D.
Edwards engaged Morgan Stanley & Co. Incorporated as J.D. Edwards' financial
advisor in connection with a potential strategic transaction.
On January 28, 2003, the Board met and representatives of Morgan Stanley
presented an analysis of the current software industry dynamics, the competitive
landscape and strategic alternatives available to J.D. Edwards, including
continuing merger discussions with PeopleSoft.
On February 2, 2003, members of senior management of both parties met in
Denver, Colorado to further discuss the possible business combination, and on
February 3, 2003, Mr. Dutkowsky reviewed with the Board a summary of those
discussions.
From February 4, 2003 to February 24, 2003, PeopleSoft and J.D. Edwards
exchanged preliminary information regarding valuation.
On February 19, 2003, the Board of Directors met with representatives of
Morgan Stanley and reviewed discussions with PeopleSoft regarding proposed the
stock exchange ratios, the exchange ratio premiums and the estimated savings
from the cost synergies from the merged operations. After discussion of
strategic alternatives available the Board authorized further discussions with
PeopleSoft.
On February 24, 2003, PeopleSoft formally engaged Citigroup as its
financial advisor in connection with a potential strategic combination with J.D.
Edwards.
On February 25, 2003, Mr. Parker reviewed with PeopleSoft's board of
directors the status of discussions and the rationale for the merger. A
representative of the law firm of Gibson, Dunn & Crutcher LLP reviewed with the
board its legal duties in considering a transaction of this nature. After
discussion, the board authorized further discussions and diligence concerning a
merger with J.D. Edwards.
During March 2003 discussions continued, but the parties were unable to
come to agreement and terminated discussions in early April.
On May 2, 2003, Messrs. Conway and Dutkowsky held a conversation regarding
a potential strategic transaction.
On May 5, 2003, Mr. Dutkowsky discussed his May 2nd conversation with Mr.
Conway with the Board of Directors in a special telephonic meeting, and the
Board authorized management to continue discussions with PeopleSoft regarding a
potential strategic transaction. On May 11, 2003, Messrs. Conway and Dutkowsky
held a telephone conversation and agreed to move forward with merger
negotiations.
11
During the period commencing on May 12, 2003 through June 1, 2003, the
parties, their financial advisors and their legal counsel conducted intensive
due diligence.
On May 15, 2003, the Board of Directors held a special telephonic meeting
at which the proposed merger was discussed and considered. At the meeting, J.D.
Edwards management and representatives of Morgan Stanley made presentations to
the Board regarding the proposed business combination. Representatives of the
law firm of Wilson Sonsini Goodrich & Rosati, Professional Corporation presented
an extensive review of the terms of the proposed merger. Following the
presentations, and after discussion, the Board directed management and counsel
to pursue further negotiations regarding the proposed merger and a merger
agreement.
On May 16, 2003, PeopleSoft and J.D. Edwards executed a new mutual
non-disclosure agreement and, as an inducement for PeopleSoft to commit its time
and resources to perform a due diligence review of J.D. Edwards and enter into
discussions regarding the proposed business combination, J.D. Edwards entered
into a 13-day exclusivity arrangement.
On May 16, 2003, PeopleSoft's counsel sent a preliminary draft merger
agreement to J.D. Edwards' counsel. On May 19, 2003, we and J.D. Edwards
executed an addendum to the mutual non-disclosure agreement relating to highly
sensitive competitive information.
On May 19, 2003, PeopleSoft's board of directors held a special meeting at
which the proposed merger was discussed and considered. Director Fanzilli was
not present at the meeting due to a family illness. A representative of Gibson,
Dunn & Crutcher LLP was also present at this meeting and reviewed with the
directors their legal duties in considering the proposed merger. At the meeting,
PeopleSoft's management and representatives of Citigroup Global Markets made
presentations to the board regarding J.D. Edwards, the opportunities for a
combined company and certain proposed terms of a business combination. Following
the presentations, and after discussion, PeopleSoft's board approved proceeding
with diligence and negotiation with representatives of J.D. Edwards.
On May 20, 2003, senior members of PeopleSoft's management and J.D.
Edwards' management, and representatives of Gibson, Dunn & Crutcher LLP, Wilson
Sonsini Goodrich & Rosati, Professional Corporation, Citigroup and Morgan
Stanley met to discuss the proposed merger agreement at the offices of Wilson
Sonsini Goodrich & Rosati, Professional Corporation in Palo Alto, California.
Based on those discussions a new draft of the merger agreement was prepared and
distributed to the parties.
On May 23, 2003, the Board of Directors held a special meeting at which the
proposed merger was discussed and considered. At the meeting, J.D. Edwards
management and representatives of Morgan Stanley reviewed various issues with to
the Board regarding the proposed business combination. Representatives of Wilson
Sonsini Goodrich & Rosati, Professional Corporation presented an extensive
review of the terms of the proposed merger agreement as well as the directors'
legal duties in considering the proposed merger. Management made extensive
presentations about the results of the due diligence review, the benefits of the
business combination and integration issues.
On May 27, 2003, PeopleSoft's board of directors held a regular meeting at
which the proposed merger was discussed and considered. At the meeting,
PeopleSoft's management and representatives of Citigroup made presentations to
the board regarding the proposed business combination. A representative of
Gibson, Dunn & Crutcher LLP was also present at this meeting, and presented a
summary of the merger agreement and the status of negotiations. Management made
extensive presentations concerning J.D. Edwards and integration issues at the
meeting. Citigroup also reviewed issues relating to fairness with the board and
gave its preliminary opinion that, as of that date, the exchange ratio in the
original merger agreement was fair, from a financial point of view, to
PeopleSoft. Following the presentations, and after discussion, PeopleSoft's
board directed management and counsel to pursue further negotiations regarding
the merger agreement and the proposed merger.
On May 28, 2003, the Board of Directors held a special meeting at which the
proposed merger was discussed and considered. At the meeting, J.D. Edwards
management and J.D. Edwards' legal and
12
financial advisors reviewed with the Board the proposed business combination and
the proposed merger agreement.
Between May 28, 2003 and May 31, 2003, offers of employment with the
combined company were made by PeopleSoft to senior management of J.D. Edwards
and the terms of employment were negotiated by the parties. PeopleSoft also
discussed with J.D. Edwards the proposed amendment to its change in control plan
and the Board amended the plan on June 1, 2003. These amendments were made in
connection with the original merger agreement and were not changed in connection
with the negotiation of the Merger Agreement. See the section of the Prospectus
entitled "The Offer -- Interests of Certain Persons in the Offer."
PeopleSoft's board of directors held a special meeting by conference
telephone call on May 28, 2003 to obtain an update regarding the status of
negotiations and to discuss open issues on the merger agreement and related
documents.
On May 31, 2003, PeopleSoft's board of directors held a special telephonic
meeting at which the proposed merger was discussed and considered. At the
meeting, PeopleSoft's management and representatives of Citigroup made
presentations to the board regarding the proposed business combination. A
representative of Gibson, Dunn & Crutcher LLP was also present at this meeting.
Citigroup presented its fairness opinion regarding the proposed transaction to
the board. The board also discussed, with the input of management and legal
counsel, final remaining open issues in the merger agreement. Following the
presentations, and after discussion, PeopleSoft's board unanimously approved the
merger agreement and the transactions contemplated by the merger agreement in
substantially the form presented to the board and authorized senior members of
PeopleSoft's management to finalize and execute the merger agreement and the
other agreements contemplated thereby on behalf of PeopleSoft.
On May 31, 2003, counsel for PeopleSoft and J.D. Edwards' counsel
negotiated the merger agreement.
On June 1, 2003, the Board of Directors held a special meeting at which the
proposed merger was discussed and considered. At the meeting, J.D. Edwards
management and representatives of Morgan Stanley made presentations to the Board
regarding the proposed business combination. Morgan Stanley presented its
financial fairness opinion regarding the consideration to be paid pursuant to
the proposed transaction to the Board. Representatives of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, provided a detailed summary of the
final terms of the merger agreement. Following the presentations, and after
discussion, the Board unanimously approved the merger agreement and the
transactions contemplated by the merger agreement in substantially the form
presented to the Board and determined the merger agreement to be in the best
interests of the J.D. Edwards stockholders and authorized members of the Board
to finalize and execute the merger agreement and the other agreements
contemplated thereby on behalf of J.D. Edwards.
On June 1, 2003, counsel for PeopleSoft and J.D. Edwards' counsel finalized
the merger agreement and, thereafter, the merger agreement, voting agreements
and certain employment agreements were executed by the relevant parties.
PeopleSoft and J.D. Edwards publicly announced the proposed transaction and
its material terms at approximately 4:30 a.m., Pacific time, on June 2, 2003.
Four days later, on June 6, 2003, Oracle Corporation announced its
intention to commence a tender offer beginning on June 9, 2003 for all issued
and outstanding PeopleSoft Common Stock, which is referred to as the "Oracle
offer," at a price of $16 per share.
Oracle also delivered a letter to PeopleSoft announcing its intention to
commence the tender offer and requesting that the board of directors redeem or
render inapplicable all outstanding preferred stock purchase rights. The letter
also stated that Oracle was prepared to meet with PeopleSoft's management to
discuss the Oracle offer.
13
On June 6, 2003, PeopleSoft filed a press release regarding the anticipated
tender offer. The release was filed with the SEC as a preliminary communication
filed under cover of Schedule 14D-9.
In response to Oracle's June 6 announcement, PeopleSoft contacted Citigroup
and Goldman, Sachs & Co. to render financial advice to the board of directors in
connection with, among other things, any tender offer commenced by Oracle. In
addition, the board of directors retained Gibson, Dunn & Crutcher LLP to render
legal advice in connection with any such tender offer.
On June 8, 2003, PeopleSoft's board of directors and its financial and
legal advisors met to discuss Oracle's June 6 announcements and to establish
procedures for thoroughly and diligently evaluating the terms of the Oracle
offer, once announced. At that meeting, PeopleSoft's board of directors formed a
committee of independent directors which was charged with evaluating the terms
of the Oracle offer, in consultation with the financial and legal advisors
engaged by PeopleSoft's board of directors to render financial advice and legal
advice in connection with, among other things, any tender offer commenced by
Oracle. PeopleSoft's board of directors retained Goldman, Sachs & Co. and
Citigroup as its financial advisors with respect to such matters and PeopleSoft
subsequently executed a written engagement letter with each financial advisor.
On June 8, 2003, Oracle and its subsidiary commenced their tender offer. The
Oracle offer is currently pending and the expiration date of the Oracle offer is
July 7, 2003.
On June 9, 2003, the Board held a special meeting to discuss the Oracle
tender offer, PeopleSoft's response to the tender offer and potential responses
by J.D. Edwards. At the invitation of the Board, representatives of Wilson
Sonsini Goodrich & Rosati, Professional Corporation, and Morgan Stanley attended
and discussed with the Board a range of legal and strategic issues related to
Oracle's tender offer, including its potential impact on the merger. Also on
June 9, Oracle delivered a letter to PeopleSoft expressing concern that
PeopleSoft had taken a negative position on the offer reaffirming its offer to
meet with PeopleSoft's board of directors and requesting that PeopleSoft redeem
its preferred stock rights plan.
On June 11, 2003, after careful consideration, including consultation with
management and its financial and legal advisors, and upon the unanimous
recommendation of the committee of independent directors, PeopleSoft's board of
directors unanimously concluded that the Oracle offer would undoubtedly face
lengthy antitrust scrutiny, with a significant likelihood that the necessary
approval would not be granted, that the delays and uncertainties created by the
Oracle offer, coupled with Oracle's stated intent to discontinue PeopleSoft's
market-leading products, represent a substantial threat to stockholder value,
and that the unsolicited and hostile nature of the Oracle offer, combined with
Oracle's statements, was designed to disrupt PeopleSoft's strong momentum at
significant cost to PeopleSoft and its employees and customers. For these and
other reasons more fully set forth in PeopleSoft's Schedule 14D-9, the board of
directors of PeopleSoft determined that the Oracle offer was not in the best
interests of PeopleSoft's stockholders and unanimously recommended that
PeopleSoft's stockholders reject the Oracle offer and not tender their shares to
Oracle to purchase pursuant to the offer.
At a special meeting held by conference telephone call on June 11, 2003,
PeopleSoft's board of directors reaffirmed its support of the acquisition of
J.D. Edwards, and the Board reaffirmed its support of the merger at a special
telephonic meeting on June 12, 2003. At the direction of PeopleSoft's board of
directors and J.D. Edwards' board of directors, from June 12 to June 15, 2003,
senior members of PeopleSoft's management team and representatives of Gibson,
Dunn & Crutcher LLP, Citigroup and Goldman Sachs met with senior members of
management of J.D. Edwards and representatives of Wilson Sonsini Goodrich &
Rosati, Professional Corporation, and Morgan Stanley in Palo Alto, California to
discuss and negotiate the Merger Agreement.
At a special meeting held by conference telephone call on June 15, 2003,
PeopleSoft's board, by the unanimous vote of the directors, approved the Merger
Agreement and the transactions contemplated thereby, including the offer and the
merger, and determined that the transactions contemplated by the Merger
Agreement, including the offer and the merger, were fair to and in the best
interests of PeopleSoft's stockholders. Citigroup rendered its opinion that, as
of that date and based upon the various considerations set forth in the opinion,
the consideration to be paid by PeopleSoft in the offer and subsequent merger is
fair, from a financial point of view, to PeopleSoft.
14
On June 15, 2003, the Board of Directors held a special telephonic meeting
at which the proposed Merger Agreement, and transactions contemplated thereby,
were discussed and considered at the meeting, J.D. Edwards management and
representatives of Morgan Stanley and Wilson Sonsini Goodrich & Rosati,
Professional Corporation, made presentations to the Board regarding the proposed
Merger Agreement, and the transactions contemplated thereby, and the potential
impact on J.D. Edwards, the stockholders of J.D. Edwards and the merger. Morgan
Stanley presented its revised fairness opinion regarding the proposed amended
transaction to the Board. Representatives of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, provided a detailed summary of the final terms of the
Merger Agreement, and the transactions contemplated thereby. Following the
presentations, and after discussion, the Board unanimously approved the Merger
Agreement and the transactions contemplated thereby in substantially the form
presented to the Board and determined the Merger Agreement, the offer and the
merger to be in the best interests of the J.D. Edwards stockholders and
authorized senior members of its management to finalize and execute the Merger
Agreement and the other agreements contemplated thereby on behalf of J.D.
Edwards. The Board also voted unanimously to recommend that the J.D. Edwards
stockholder accept the offer and tender their Shares pursuant to the offer.
The Merger Agreement is designed to allow the two companies to accelerate
the completion of the transaction and bring forward the benefits of their
combination. PeopleSoft's board of directors believes that the transactions
contemplated by the Merger Agreement provide several benefits to its
stockholders, including, among others:
- the Merger Agreement reaffirms the commitment of PeopleSoft and J.D.
Edwards to combine;
- the Merger Agreement provides an opportunity to complete the transaction
in a more timely fashion;
- the amended terms of the transaction will minimize customer uncertainty
arising from Oracle's offer and enable PeopleSoft and J.D. Edwards to
speed their integration plans and the substantial benefits of the
combination; and
- the cash portion of the consideration reduces the dilution to
PeopleSoft's stockholders, increases the certainty of the value of the
transaction to J.D. Edwards stockholders and, at the same time, increases
the accretion to PeopleSoft's earnings per share for the benefit of all
stockholders.
J.D. EDWARDS' REASONS FOR THE OFFER AND THE MERGER
The Board of Directors believes that the offer and the merger are
advisable, fair to and in the best interest of, J.D. Edwards and the J.D.
Edwards stockholders. At a special meeting of the Board of Directors held on
June 1, 2003, at which the original merger agreement and the transactions
relating thereto were considered and voted upon, the J.D. Edwards directors
unanimously approved the original merger agreement and the merger. On June 15,
2003, at a special meeting, the J.D. Edwards' directors unanimously approved the
offer, the Merger Agreement and the merger. The directors unanimously recommend
that the holders of Shares accept the offer, tender their Shares and approve the
Merger Agreement and the merger.
In the course of reaching its decision to approve the offer and the Merger
Agreement, the Board of Directors consulted with J.D. Edwards' management, as
well as its outside legal counsel and its financial advisors, and considered the
following material factors:
- the Board's judgment that the two companies have significant
complementary strengths and complementary products:
- PeopleSoft is a leader in providing enterprise applications and services
to large enterprises, and J.D. Edwards is a leader in providing
enterprise applications and services to mid-market businesses;
15
- PeopleSoft has strong human resource products, and J.D. Edwards has
strong manufacturing and distribution products;
- PeopleSoft is a leading provider to the service industries, such as
financial services, telecommunications, healthcare, government and
education, and J.D. Edwards is a leading provider in manufacturing and
distribution industries, including wholesale distribution, industrial,
consumer and life sciences; asset-intensive industries; and project and
service industries, including construction and real estate;
- the combined company's potential to grow by leveraging a strong global
presence;
- the resulting business has greater global scale and expertise, along with
the opportunity for increased revenue growth and increased margins and
profits;
- the Board's judgment that the two companies have similar cultures;
- that based on the prices of J.D. Edwards and PeopleSoft Common Stock at
the time the Merger Agreement was approved by the Board, the premium of
the transaction value offered over the price of J.D. Edwards Common Stock
then prevailing in the market; and
- the ability to elect to receive stock consideration provides an
opportunity for J.D. Edwards stockholders to participate in the future
growth in value of the combined company following the merger as
stockholders of PeopleSoft.
In the course of its deliberations, the Board of Directors considered a
number of additional factors relevant to the offer and the merger, including:
- historical information concerning J.D. Edwards and PeopleSoft and their
respective businesses, financial performance, condition, operations,
technology, management and position in their respective industries, and
information and evaluations regarding the two companies' strengths,
weaknesses and prospects, both before and after giving effect to the
offer and the merger;
- the potential effect on stockholder value of J.D. Edwards continuing as
an independent entity compared to the potential effect of a combination
with PeopleSoft in light of the other possible strategic alternatives the
Board examined;
- the presentations of J.D. Edwards' financial advisor, Morgan Stanley &
Co. Incorporated, in connection with its opinion (which opinion is
attached to this Statement as Annex B) to the effect that, as of June 15,
2003, and subject to the assumptions, qualifications and limitations set
forth in its written opinion, the per share merger consideration to be
paid pursuant to the Merger Agreement was fair, from a financial point of
view, to holders of J.D. Edwards Common Stock;
- current financial market conditions and historical market prices,
volatility and trading information for J.D. Edwards Common Stock and
PeopleSoft Common Stock, and various factors that might affect the market
value of PeopleSoft Common Stock in the future;
- the premium represented by the offer consideration and the premiums paid
in other recent transactions that could be viewed as comparable, as well
as the negotiations between J.D. Edwards and PeopleSoft relating to the
offer consideration;
- the alternatives available to J.D. Edwards; and
- the terms of the offer, the Merger Agreement and related agreements, by
themselves and in comparison to the terms of other transactions, and the
intensive negotiations between PeopleSoft and J.D. Edwards including
their negotiations relating to the details of the Merger Agreement,
including but not limited to, the conditions to the parties' obligations
to complete the offer and the merger, the details of the "no shop"
restrictions on J.D. Edwards and the scope of J.D. Edwards "fiduciary
out" from these restrictions, the parties' termination rights, the
termination fee that
16
J.D. Edwards may be required to pay PeopleSoft in certain circumstances
and the voting agreements.
The potential negative factors the Board of Directors considered include:
- the fact that a portion of the consideration is based on a fixed exchange
ratio means that the aggregate value of the transaction will fluctuate
subject to the changes in PeopleSoft's trading price in the public
market;
- the fact that pursuant to the Merger Agreement, J.D. Edwards is required
to obtain PeopleSoft's consent before it can take a variety of actions
between the signing and the closing of the merger;
- the risk that potential benefits and synergies sought in the merger may
not be fully realized, if at all;
- the risk that the operations of J.D. Edwards would be disrupted from
employee uncertainty following announcement of the offer and the merger;
- the risk of potential delay or reduction in customer orders;
- the risk that despite the efforts of the combined company, key technical
and management personnel of J.D. Edwards might not choose to remain
employed by the combined company;
- the possibility that the trading price or value of PeopleSoft's Common
Stock may decrease in the future;
- the adverse effect on J.D. Edwards' business, operating results and
financial condition and the effect on J.D. Edwards' ability to attract
and retain key management, marketing and technical personnel, in the
event the offer and the merger were not consummated following public
announcement that the Merger Agreement had been entered into; and
- various other risks associated with the businesses of J.D. Edwards,
PeopleSoft and the combined company and the merger, including those
described under the section entitled "Risk Factors" in the Prospectus.
The Board of Directors concluded, however, that many of these risks could
be managed or mitigated by J.D. Edwards or by the combined company or were
unlikely to have a material impact on the offer, the merger or the combined
company, and that, overall, the risks, uncertainties, restrictions and
potentially negative factors associated with the offer and the merger were
outweighed by the potential benefits of the offer and the merger.
The foregoing discussion of factors considered by the Board of Directors is
not meant to be exhaustive but includes the material factors considered by the
board in approving the Merger Agreement and the transactions contemplated by the
Merger Agreement and in recommending that stockholders accept the offer, tender
their Shares and approve the Merger Agreement and the merger. The Board of
Directors did not find it practicable to, and did not, quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. Rather, the Board made their respective determination based on
the totality of the information presented to them, and the judgments of
individual members of the Board may have been influenced to a greater or lesser
degree by different factors. In approving the Merger Agreement, the Board of
Directors was aware of the interests of J.D. Edwards' management in the merger,
as described in the section of the Prospectus entitled "The Merger -- Interests
of Certain Persons in the Merger."
17
OPINION OF J.D. EDWARDS' FINANCIAL ADVISOR
A description of the opinion of J.D. Edwards' financial advisor is included
in the Prospectus in the section entitled "J.D. Edwards' Reasons for the Offer
and the Merger -- Opinion of J.D. Edwards' Financial Advisor," which is
incorporated herein by reference.
(C) INTENT TO TENDER
To J.D. Edwards' knowledge after reasonable inquiry, all of J.D. Edwards'
executive officers and directors currently intend to tender all Shares
beneficially owned by them pursuant to the offer except to the extent that the
tender would violate applicable securities laws and except to the extent that
the tender would give rise to liability under Section 16(b) of the Securities
Exchange Act of 1934, as amended, as advised by counsel. The foregoing does not
include any Shares over which, or with respect to which, any such executive
officer or director acts in a fiduciary or representative capacity or is subject
to the instructions of a third party with respect to such tender. See also
"Agreements Related to the Merger" under Item 3.
J.D. Edwards will not tender any Shares held by it in the offer. Pursuant
to the Merger Agreement, any Shares held by J.D. Edwards will be cancelled at
the effective time of the merger.
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED
A summary of the material provisions of the agreement between J.D. Edwards
and Morgan Stanley, in its capacity as the Company's financial advisor, is
included in the Prospectus in the section entitled "J.D. Edwards' Reasons for
the Offer and the Merger -- Opinion of J.D. Edwards' Financial Advisor," which
is incorporated herein by reference.
A summary of the material provisions of the agreement between PeopleSoft
and Georgeson Shareholder Communications Inc., in its capacity as information
agent, is included in the Prospectus in the section entitled "The Offer -- Fees
and Expenses," which is incorporated herein by reference.
The Bank of New York is the exchange agent for the offer and will be
responsible for the operation of the tender and exchange of holders of Shares. A
summary of the material provisions of the agreement between PeopleSoft and the
Bank of New York is included in the Prospectus in the section entitled "The
Offer -- Fees and Expenses," which is incorporated herein by reference. See the
sections of the Prospectus entitled "The Offer -- Exchange of J.D. Edwards
Shares; Delivery of Cash and PeopleSoft Common Stock" and "The
Offer -- Procedures for Tendering" for a description of the exchange agent and
its role in the offer.
Except as set forth above, neither J.D. Edwards nor any person acting on
its behalf has employed, retained or compensated, or currently intends to
employ, retain or compensate, any person to make solicitations or
recommendations to J.D. Edwards stockholders on its behalf with respect to the
offer or the merger.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
Except as set forth in the chart below, no transactions in Shares during
the past 60 days have been effected by J.D. Edwards or, to the best of J.D.
Edwards's knowledge, by any executive officer, director, affiliate or subsidiary
of J.D. Edwards.
<Table>
<Caption>
NUMBER
TRANSACTION OF PER SHARE WHERE AND HOW
NAME DATE SHARES SALE PRICE TRANSACTION EFFECTED
- ---- ----------- ------ ---------- --------------------
Michael J. Maples............................. 5/20/03 2,032 11.14) Option grant
(exercise
price
</Table>
18
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
Except as described or referred to in this Statement, no negotiation is
being undertaken or engaged in by J.D. Edwards in response to the offer that
relates to or would result in (1) a tender offer or other acquisition of the
Shares by J.D. Edwards, any of its subsidiaries or any other person, (2) an
extraordinary transaction, such as a merger, reorganization, or liquidation
involving J.D. Edwards or any of its subsidiaries, (3) a purchase, sale or
transfer of a material amount of assets by J.D. Edwards or any of its
subsidiaries or (4) any material change in the present dividend rate or policy,
or indebtedness or capitalization of J.D. Edwards.
Except as described or referred to in this Statement, there are no
transactions, resolutions of the J.D. Edwards Board, agreements in principle, or
signed contracts entered into in response to the Offer that would relate to one
or more of the matters referred to in the preceding paragraph.
ITEM 8. ADDITIONAL INFORMATION
RECENT DEVELOPMENTS
On June 6, 2003, Oracle Corporation announced that it intended to commence
a cash tender offer to purchase all of the outstanding shares of PeopleSoft for
$16 per share, or approximately $5.1 billion.
On June 8, 2003, PeopleSoft's board of directors discussed Oracle's June 6
announcement and formed a committee of non-management directors, comprised of
Frank J. Fanzilli, Jr., Steven D. Goldby, A. George Battle and Cyril J.
Yansouni, to evaluate and assess the terms of Oracle's tender offer, once
announced, in consultation with PeopleSoft's board of directors' financial and
legal advisors, and make a recommendation to its board.
On June 9, 2003, Oracle Corporation and Pepper Acquisition Corp., a
Delaware corporation and wholly-owned subsidiary of Oracle, filed a Tender Offer
Statement on Schedule TO with the SEC in connection with the Oracle offer.
On June 9, 2003 a putative class action lawsuit was filed in District
Court, County of Jefferson, Colorado by J.D. Edwards stockholders against J.D.
Edwards' directors and officers alleging breaches of fiduciary duty by such
persons and seeking to enjoin the transactions contemplated by the merger.
On June 11, 2003, PeopleSoft's board of directors, including all of the
members of the transaction committee, met with management and the PeopleSoft
board's financial and legal advisors to further consider and discuss the Oracle
offer. After careful consideration, including consultation with management and
the board's financial and legal advisors, the committee unanimously concluded
that the Oracle offer would undoubtedly face lengthy antitrust scrutiny, with a
significant likelihood that the necessary approval would not be granted, that
the delays and uncertainties created by Oracle's tender offer, coupled with
Oracle's stated intent to discontinue our market-leading products, represented a
substantial threat to stockholder value, and that the unsolicited and hostile
nature of Oracle's tender offer, combined with Oracle's statements, was designed
to disrupt PeopleSoft's strong momentum at significant cost to PeopleSoft and
its customers. For these and other reasons more fully described in PeopleSoft's
Solicitation/Recommendation on Schedule 14D-9, the committee determined that the
Oracle offer was not in the best interests of PeopleSoft's stockholders and
unanimously recommended to the full board of directors that the full board, in
turn, recommend that PeopleSoft's stockholders reject the Oracle tender offer
and not tender their shares to Oracle for purchase. The full PeopleSoft board of
directors concurred with the committee and, having determined that the Oracle
tender offer was not in the best interests of PeopleSoft's stockholders,
unanimously recommended that PeopleSoft's stockholders reject the offer.
PeopleSoft publicly announced the PeopleSoft board's recommendation on June 12,
2003.
In response to the Oracle offer, on June 12, 2003, J.D. Edwards filed a
suit in California Superior Court in the County of San Mateo against Oracle
Corporation, Pepper Acquisition Corp. and two of Oracle's executives alleging
violations of California's Business and Professions Code Section 17200 et seq.,
intentional interference with prospective economic advantage and negligent
interference with prospective
19
economic advantage. The suit seeks compensatory and exemplary damages, as well
as preliminary and permanent injunctive relief enjoining the defendants from
proceeding with Oracle's proposed tender offer, taking or attempting to take any
other steps to acquire control of PeopleSoft or J.D. Edwards, and otherwise
interfering with the completion of the proposed acquisition of J.D. Edwards by
PeopleSoft.
On June 12, 2003, J.D. Edwards filed a suit in District Court for the City
and County of Denver, Colorado against Oracle Corporation and its wholly owned
subsidiary, Pepper Acquisition Corp., alleging claims for tortious interference
with contract and prospective business relations. The suit seeks, among other
things, compensatory damages of $1.7 billion and an unspecified amount of
punitive damages.
On June 13, 2003, PeopleSoft filed a suit in the California Superior Court
for the County of Alameda against Oracle Corporation and Pepper Acquisition
Corp. In that suit, PeopleSoft alleged that in connection with Oracle's proposed
tender offer, the defendants have engaged in: (1) unfair trade practices in
violation of California's Business and Professions Code; (2) acts of unlawful
interference with our contracts with our customers; (3) acts of unlawful
interference with our relationships with prospective customers; and (4) acts of
unlawful disparagement of our products and services. PeopleSoft seeks an
injunction precluding defendants' unfair trade practices and other unlawful
actions, proceeding further with the tender offer, restitution and damages. On
June 17, 2003 Oracle removed the case to federal district court.
In addition, ten stockholder lawsuits have been filed against PeopleSoft
and certain of its directors and executive officers alleging breaches of
fiduciary duties by PeopleSoft and such persons and seeking to enjoin
transactions contemplated by the merger. The California stockholder lawsuits
have been stayed. A plaintiff in one of the Delaware stockholder lawsuits has
filed a motion for preliminary injunction.
On June 18, 2003, Oracle Corporation announced that it had amended its
offer to purchase all of the outstanding stock of PeopleSoft by increasing the
purchase price from $16.00 to $19.50 per share. PeopleSoft has issued a press
release encouraging its stockholders not to take any action with respect to
Oracle's amended offer, pending consideration of the amended offer by the board
of directors of PeopleSoft. In addition, Oracle Corporation filed a lawsuit
against PeopleSoft, the members of its board of directors and J.D. Edwards in
the Delaware Chancery Court. The lawsuit alleges breaches of fiduciary duties
against PeopleSoft and its board of directors and seeks injunctive relief
requiring (i) rescission of the Merger Agreement; (ii) an injunction against the
offer; an order requiring PeopleSoft to redeem its rights plan or amend the plan
to permit the Oracle offer to proceed; (iii) an injunction requiring the
PeopleSoft board to take action to make Section 203 of the Delaware General
Corporation Law inapplicable to the Oracle offer; and (iv) an injunction
prohibiting PeopleSoft from implementing a recently announced customer
protection program. The claims against J.D. Edwards are based on aiding and
abetting PeopleSoft and the director defendants. A hearing on a motion for
preliminary injunction is presently scheduled for July 2003. PeopleSoft and J.D.
Edwards believe that the Oracle suit is without merit and intend to vigorously
defend this lawsuit as well as other pending litigation relating to the Oracle
offer and the offer and the merger.
DELAWARE GENERAL CORPORATION LAW
Short Form Merger. Under the Delaware General Corporation Law ("DGCL"), if
the Purchaser acquires, pursuant to the offer or otherwise, at least 90% of the
outstanding Shares, the Purchaser will be able to effect the Merger after
consummation of the Offer without the approval of the Company's stockholders.
However, if the Purchaser does not acquire at least 90% of the Shares pursuant
to the offer or otherwise and a vote of the Company's stockholders is required
under the DGCL, a significantly longer period of time will be required to effect
the Merger. Assuming that the Purchaser acquires at least 90% of the outstanding
Shares, Purchaser will be able to approve the Merger without the vote of any
other stockholder and the Merger Agreement requires Purchaser and PeopleSoft to
vote all Shares held by them in favor of the Merger if a stockholder vote is
required.
Appraisal Rights. Under the DGCL, dissenters' appraisal rights are
available to a corporation's stockholders in connection with certain mergers and
consolidations. Under the DGCL, any J.D. Edwards
20
stockholder who does not wish to accept the consideration provided for in the
Merger Agreement has the right to demand appraisal of, and to be paid the fair
market value for, his or her Shares.
REGULATORY CLEARANCES AND APPROVALS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
the Shares may not be accepted and the merger may not be consummated unless
certain filings have been submitted to the FTC and the Antitrust Division of the
United States Department of Justice and certain waiting period requirements have
been satisfied. PeopleSoft and J.D. Edwards have filed notification and report
forms under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with the
FTC and with the Antitrust Division of the United States Department of Justice.
PeopleSoft and J.D. Edwards also have made or intend to make pre-merger filings
in France and Brazil in any additional foreign jurisdictions where such filings
may be required.
SECTION 14(f) INFORMATION; PURCHASER'S DESIGNATION OF PERSONS TO BE ELECTED TO
THE BOARD OF DIRECTORS.
The Information Statement attached as Annex A to this Schedule 14D-9 is
being furnished in connection with the possible designation by Purchaser,
pursuant to the terms of the Merger Agreement, of certain persons to be elected
to the Board of Directors other than at a meeting of the J.D. Edwards
stockholders.
INCORPORATION BY REFERENCE
The information contained in all of the Exhibits referred to in Item 9
below is incorporated herein by reference.
ITEM 9. MATERIALS TO BE FILED AS EXHIBITS
The following exhibits are filed herewith:
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(a)(1) Prospectus, dated June 19, 2003 (incorporated by reference
to the prospectus included in the registration statement on
Form S-4 of PeopleSoft, Inc. filed on June 19, 2003).
(a)(2) Letter of Transmittal (incorporated by reference to Exhibit
99.7 to the registration statement on Form S-4 of
PeopleSoft, Inc. filed on June 19, 2003 ).
(a)(3) Letter to holders of Common Stock of J.D. Edwards & Company,
dated June 19, 2003.*
(a)(4) Information Statement Pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and Rule 14f-1 thereunder
(incorporated by reference and attached hereto as Annex A).*
(a)(5) Joint Press Release of J.D. Edwards & Company and
PeopleSoft, Inc., dated June 1, 2003 (incorporated by
reference to J.D. Edwards' filing pursuant to Rule 425 under
the Securities Act on June 2, 2003).
(a)(6) Press release of J.D. Edwards & Company, dated June 9, 2003
(incorporated by reference to J.D. Edwards' filing pursuant
to Rule 425 under the Securities Act on June 9, 2003).
(a)(7) Press Release of J.D. Edwards & Company, dated June 12, 2003
(incorporated by reference to J.D. Edwards' filing pursuant
to Rule 425 under the Securities Act on June 12, 2003).
(a)(8) Press Release of J.D. Edwards & Company, dated June 13, 2003
(incorporated by reference to J.D. Edwards' filing pursuant
to Rule 425 under the Securities Act on June 13, 2003).
(a)(9) Press Release of PeopleSoft, Inc., dated June 13, 2003
(incorporated by reference to J.D. Edwards' filing pursuant
to Rule 425 under the Securities Act on June 13, 2003).
(a)(10) Complaint of Oracle Corporation against PeopleSoft, Inc.,
Craig A. Conway, David A. Duffield, Aneel Bhusri, Steven D.
Goldby, A. George Blatte, Frank J. Fanzilli, Cyril J.
Yansouri and J.D. Edwards & Company filed on June 18, 2003
in the Court of Chancery of the State of Delaware.
</Table>
21
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(a)(11) Joint Press Release of J.D. Edwards & Company and
PeopleSoft, Inc., dated June 16, 2003 (incorporated by
reference to J.D. Edwards' Schedule 14D-9, filed June 16,
2003).
(e)(1) Amended and Restated Agreement and Plan of Merger and
Reorganization among PeopleSoft, Inc., Jersey Acquisition
Corporation and J.D. Edwards & Company, dated as of June 16,
2003 (incorporated by reference to Appendix A to the
registration statement on Form S-4 of PeopleSoft, Inc. filed
on June 19, 2003).
(e)(2) Form of Stockholder Voting Agreement, dated as of June 16,
2003, among PeopleSoft, Inc. and certain stockholders of
J.D. Edwards & Company (incorporated by reference to Exhibit
C to Appendix A to the registration statement on Form S-4 of
PeopleSoft, Inc. filed on June 19, 2003).
(e)(3) Form of Affiliate Agreement, dated as of June 16, 2003,
among PeopleSoft, Inc. and certain affiliates of J.D.
Edwards & Company (incorporated by reference to Exhibit B to
Appendix A to the registration statement on Form S-4 of
PeopleSoft, Inc. filed on June 19, 2003).
(e)(4) Opinion of Morgan Stanley to the Board of Directors of J.D.
Edwards & Company, dated June 15, 2003 (included as Annex B
to this Schedule 14D-9).*
(e)(5) Amended Management Change in Control Plan of J.D. Edwards &
Company.
(e)(6) Amended Employment Agreement between J.D. Edwards & Company
and Robert Dutkowsky, dated June 1, 2003.
(e)(7) Amended Employment Agreement between J.D. Edwards & Company
and Richard Allen, dated June 1, 2003.
(e)(8) Amended Employment Agreement between J.D. Edwards & Company
and Richard Snow, dated June 1, 2003.
(e)(9) Form of Offer Letter for Certain Key Executive Officers of
J.D. Edwards & Company.
(e)(10) Form of Offer Letter for Certain Employees of J.D. Edwards &
Company.
(e)(11) J.D. Edwards & Company 1992 Incentive Stock Option Plan
(incorporated by reference to Exhibit 10.16 to J.D. Edwards
& Company's registration statement on Form S-1).
(e)(12) J.D. Edwards & Company 1997 Equity Incentive Plan
(incorporated by reference to Exhibit 10.21 to J.D. Edwards
& Company's registration statement on Form S-1).
(e)(13) J.D. Edwards & Company 2003 Equity Incentive Plan
(incorporated by reference to Appendix B to J.D. Edwards &
Company's 2003 Definitive Proxy Statement for its Annual
Meeting of Stockholders).
(e)(14) Form of Indemnification Agreement between J.D. Edwards &
Company and its Officers and Directors (incorporated by
reference to Exhibit 10.16 to J.D. Edwards & Company's
registration statement on Form S-1).
(e)(15) Form of Management Change in Control Plan, participated in
by J.D. Edwards & Company's executive officers (incorporated
by reference to Exhibit 10.15 for J.D. Edwards & Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 2000).
(e)(16) Employment Agreement, dated January 2, 2002, between by J.D.
Edwards & Company and Robert M. Dutkowsky (incorporated by
reference to Exhibit 10.15 for J.D. Edwards & Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 2001).
</Table>
- ---------------
* Included in copies mailed to stockholders of J.D. Edwards.
22
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
J.D. EDWARDS & COMPANY
By: /s/ RICHARD G. SNOW, JR.
------------------------------------
Richard G. Snow, Jr.
Vice President, General Counsel
and Secretary
Date: June 19, 2003
23
ANNEX A
J.D. EDWARDS & COMPANY
ONE TECHNOLOGY WAY
DENVER, CO 80237-3000
(303) 334-4000
---------------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
GENERAL
This Information Statement is being mailed on or about June 19, 2003, as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 ("Schedule
14D-9") to holders of shares of common stock, $0.001 par value per share, of
J.D. Edwards & Company, a Delaware corporation ("J.D. Edwards" or the "Company")
(the "Shares"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in Schedule 14D-9, which (including the
exhibits thereto) is incorporated by reference herein. This Information
Statement is being provided in connection with the possible appointment of
persons designated by PeopleSoft, Inc., a Delaware corporation ("PeopleSoft"),
or Jersey Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of PeopleSoft ("Purchaser"), to at least a majority of the seats on
the Board of Directors of the Company (the "Board"). Such designation is to be
made pursuant to Section 1.3 of the Amended and Restated Agreement and Plan of
Merger and Reorganization, dated as of June 16, 2003 (the "Merger Agreement"),
among PeopleSoft, Purchaser and the Company, attached hereto as Exhibit(e)(1).
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE
NOT, HOWEVER, REQUIRED TO TAKE ANY ACTION.
Pursuant to the Merger Agreement, on June 19, 2003, Purchaser will commence
a tender offer to acquire all of the issued and outstanding Shares. The offer is
scheduled to expire at midnight, on July 17, 2003, unless the offer is extended.
Following the successful completion of the offer, upon approval by a stockholder
vote, if required, and subject to certain other conditions, Purchaser will be
merged with and into the Company and the Company shall become a wholly owned
subsidiary of PeopleSoft. After the first merger, J.D. Edwards will merge with
and into PeopleSoft or a wholly owned subsidiary of PeopleSoft in a second
merger. It is possible, however, that the acquisition of J.D. Edwards will be
effected using an alternative structure. The Merger Agreement, a copy of which
is filed as Exhibit(e)(1) to Schedule 14D-9, is incorporated herein by
reference.
The information contained in this Information Statement concerning
PeopleSoft, Purchaser and the designees of Purchaser to the Board has been
furnished to the Company by PeopleSoft, and the Company assumes no
responsibility for the accuracy or completeness of such information.
THE PEOPLESOFT DESIGNEES
If Purchaser purchases at least a majority of the outstanding Shares
pursuant to the Offer, the Merger Agreement provides that Purchaser will be
entitled to designate a number of directors to the Board sufficient to give
Purchaser proportionate representation on the Board ("Purchaser's Proportionate
Representation"). The Purchaser's Proportionate Representation will be equal to
that number of directors (rounded up to the next whole number) that equals the
product of the total number of directors on the Board multiplied by the
percentage that the aggregate number of Shares purchased by Purchaser bears to
the number of Shares issued and outstanding. Upon request by Purchaser, the
Company will increase the
A-1
size of the Board or use its best efforts to secure the resignations of the
number of directors necessary to provide Purchaser with Purchaser's
Proportionate Representation and will cause Purchaser's designees to be so
elected; provided, however, that until the Effective Time of the Merger, the
Board will have at least two directors (the "Independent Directors") who are
directors as of the signing of the Merger Agreement (or failing the availability
of one or both such directors, designees of the Board) and who are neither
officers of the Company nor designees, affiliates or associates of PeopleSoft or
the Purchaser.
PeopleSoft and Purchaser have advised the Company that Purchaser's
designees to the Board (the "PeopleSoft Designees") will be among the persons
listed in Appendix E attached to the Prospectus. Appendix E includes the name,
address, principal occupation or employment and five-year employment history
with respect to each such person. PeopleSoft and Purchaser have advised the
Company that each of the persons listed in Appendix E has consented to serve as
a director of the Company if appointed or elected. PeopleSoft and Purchaser have
advised the Company that none of these persons currently is a director of, or
holds any positions with, the Company. PeopleSoft and Purchaser have advised the
Company that, to their knowledge, none of the persons listed on Appendix E or
any of their affiliates beneficially owns any equity securities or rights to
acquire any such securities of the Company, nor has any such person been
involved in any transaction with the Company or any of its directors, executive
officers or affiliates that is required to be disclosed pursuant to the rules
and regulations of the Securities and Exchange Commission (the "SEC") other than
with respect to transactions between PeopleSoft, Purchaser and the Company that
have been described in Schedule TO or Schedule 14D-9.
PeopleSoft and Purchaser have advised the Company that, to the knowledge of
PeopleSoft and Purchaser, none of the persons listed on Appendix E is an adverse
party to the Company in any material legal proceedings or has a material
interest that is adverse to the Company in any such proceedings. PeopleSoft and
Purchaser have also advised the Company that, to the knowledge of PeopleSoft and
Purchaser, none of the persons listed in Appendix E was, during the last five
years, convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was, or is, subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws or is involved in any other legal
proceeding which is required to be disclosed under Item 401(f) of Regulation S-K
promulgated by the SEC.
It is expected that the PeopleSoft Designees will assume office following
the acceptance for purchase by Purchaser of the specified minimum number of
Shares pursuant to the offer. The directors of Purchaser immediately prior to
the effective time shall be the directors and officers of the surviving
corporation at the effective time, each to hold office in accordance with the
certificate of incorporation and by-laws of the surviving corporation until
successors are duly elected or appointed and qualified.
INFORMATION CONCERNING THE SHARES
The Shares are the only securities outstanding having the right to vote for
the election of the Company's directors at a stockholder meeting if one were to
be held. Each Share entitles its record holder to one vote. As of the close of
business on May 28, 2003, there were 122,426,664 Shares issued and outstanding.
INFORMATION CONCERNING J.D. EDWARDS
J.D. Edwards was incorporated in Colorado in 1977 and reincorporated in
Delaware in 1997.
A-2
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Shares as of May 28, 2003, by the following individuals or
groups:
- each person, or group of affiliated persons, known by the Company to
beneficially own more than 5% of our outstanding stock;
- each the Company's current directors;
- the Company's Chief Executive Officer and each of its four most highly
compensated executive officers in the fiscal year ended October 31, 2002;
and
- all of the Company's executive officers and directors as a group.
The number and percentage of Shares beneficially owned is determined in
accordance with Rule 13d-3 of the Exchange Act, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rule, beneficial ownership includes any Shares as to which the individual or
entity has voting power or investment power and any Shares that the individual
has the right to acquire within 60 days of May 28, 2003 through the exercise of
any stock option or other right. Unless otherwise indicated in the footnotes,
each person or entity has sole voting and investment power (or shares such
powers with his or her spouse) with respect to the Shares shown as beneficially
owned. Except as otherwise noted, the address for each stockholder on this table
is c/o J.D. Edwards & Company, One Technology Way, Denver, Colorado 80237-3000.
The percentage of beneficial ownership is based on 122,426,664 Shares
outstanding as of May 28, 2003.
<Table>
<Caption>
OPTIONS
EXERCISABLE TOTAL SHARES PERCENT
SHARES WITHIN 60 BENEFICIALLY BENEFICIALLY
NAME ACTUALLY HELD DAYS(1)(2) OWNED(1) OWNED
- ---- ------------- ----------- ------------ ------------
Richard E. Allen(3)........................... 341,748 601,150 942,898 *
Kathleen J. Cunningham........................ -- -- -- *
Harry Debes................................... 2,740 43,333 46,073 *
Robert M. Dutkowsky........................... -- 634,375(4) 634,375 *
Gerald Harrison............................... 11,540 66,584 78,124 *
Delwin D. Hock................................ 15,240 66,584 81,824 *
Michael J. Maples............................. 25,870 60,646 86,516 *
Trygve E. Myhren.............................. 20,040 56,584 76,624 *
Robert C. Newman(5)........................... 7,426,854 -- 7,426,854 6.07%
Richard Matthews.............................. -- 70,019 70,019 *
Michael Madden................................ 5,477 258,271 263,748 *
All directors and executive officers as a
group (15 Persons including those Named
above)...................................... 7,884,943 2,231,763 10,116,706 8.12%
</Table>
- ---------------
* Less than 1% of the Company's Common Stock
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934 and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under this rule, beneficial ownership includes any shares as
to which the individual or entity has voting power or investment power and
any shares which the individual has the right to acquire within 60 days
after May 28, 2003 through the exercise of any stock option or other right.
Unless otherwise indicated in the footnotes, each person or entity has sole
voting and investment power or shares voting and investment power with his
or her spouse with respect to the shares shown as beneficially owned.
A-3
(2) The amounts shown in this column represent shares of J.D. Edwards Common
Stock that each person has the right to acquire as a result of the exercise
of stock options within 60 days after May 28, 2003.
(3) Includes 299,011 shares held by the Allen Family Trust, 21,660 shares held
by the Allen Family charitable Lead Trust, 3,200 shares held by the Allen
Family Foundation, and 14,000 shares held of record by Mr. Allen's children.
(4) Includes options to purchase 84,375 shares of common stock and 50,000 shares
of common stock underlying restricted stock purchase rights granted to Mr.
Dutkowsky for which the repurchase rights have lapsed.
(5) Includes 4,651,619 shares held by Newkop Investments L.L.P., a company
affiliated with Mr. Newman, 191,804 shares held of record by Mr. Newman's
wife in each of the Judith Newman Grantor Retained Annuity Trusts 3 and 4,
and 191,804 shares held of record by Mr. Newman in each of the Robert Newman
Grantor Retained Annuity Trusts 3 and 4.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since December of 1998, Jones Lang LaSalle has represented the Company in
certain real estate transactions, including as tenant representative in locating
field offices and providing project management services for tenant build out of
certain field offices. Ryan S. Cunningham, the stepson of Kathy Cunningham, who
joined the Board of Directors in November 2002, is an employee of Jones Day, a
division of Jones Lang LaSalle, in the Denver office. The broker services
provided by the Jones Lang LaSalle division for which Ms. Cunningham's step son
is employed are not paid for directly by the Company, but are reimbursed out of
a sharing of commissions with the landlord's broker. Ms. Cunningham has not
participated in any Board discussions with respect to the Jones Lang LaSalle
relationship in the past, nor will she participate in any future discussions.
Any future transactions between the Company and any director or executive
officer will be subject to approval by a majority of the disinterested members
of the Board.
DIRECTORS AND EXECUTIVE OFFICERS OF J.D. EDWARDS & COMPANY
GENERAL
J.D. Edwards currently has eight members on the Board with one vacancy. The
Board is divided into three classes with each director serving a three-year term
and one class being elected at each year's Annual Meeting of Stockholders. There
are no family relationships among any of J.D. Edwards's directors or executive
officers. Executive officers serve at the discretion of the Board.
The following table and notes set forth the names, ages, positions held
with J.D. Edwards and certain other information of all Company directors and
executive officers as of the date of this Information Statement:
<Table>
<Caption>
NAME AGE POSITION
- ---- --- --------
Robert T. Dutkowsky(4)................. 48 Chairman of the Board, President and Chief Executive
Officer
Gerald Harrison(1)(4).................. 71 Director
Delwin Hock(1)(4)...................... 68 Director
Richard E. Allen(3).................... 46 Director, Executive Vice President, Finance and
Administration, and Chief Financial Officer
Kathleen J. Cunningham(1)(3)........... 56 Director
Robert C. Newman(3)(4)................. 59 Director
Michael J. Maples(2)................... 60 Director
Trygve E. Myhren(2)(3)................. 66 Director
</Table>
A-4
<Table>
<Caption>
NAME AGE POSITION
- ---- --- --------
Leslie Wyatt........................... 53 Senior Vice President and Chief Marketing Officer
Harry Debes............................ 52 Senior Vice President, Americas Sales and Consulting
Services
Richard Mathews........................ 38 Senior Vice President, International Sales and
Consulting Services
David Siebert.......................... 45 Group Vice President, WorldSoftware
Michael Madden......................... 40 Senior Vice President, Software Engineering and Chief
Technology Officer
Pamela Saxton.......................... 50 Vice President of Finance, Corporate Controller and
Chief Accounting Officer
Richard Snow, Jr. ..................... 58 Vice President, General Counsel and Secretary
</Table>
- ---------------
(1) Member of the Audit Committee of the Board.
(2) Member of the Compensation Committee of the Board.
(3) Member of the Finance Committee of the Board.
(4) Member of the Governance and Nominations Committee of the Board.
Robert M. Dutkowsky has been President and Chief Executive Officer and a
member of the Board of Directors of the Company since January 2002. He has
served as Chairman of the Board since March 2002. Mr. Dutkowsky joined J.D.
Edwards from Teradyne, Inc., where he served as President of its Assembly Test
Division from October through December 2001. From April 2000 through October
2001, Mr. Dutkowsky was Chairman, President, and Chief Executive Officer of
GenRad, Inc., which was acquired by Teradyne in October 2001. Prior to joining
GenRad in 2000, Mr. Dutkowsky was with EMC, where he served as Executive Vice
President responsible for global sales, marketing, alliances, and customer
service from October 1997 until its acquisition of Data General in 1999. He
served as President of Data General in 1999 after its acquisition by EMC.
Previously, Mr. Dutkowsky held management positions at IBM during his 20-year
employment with that company. Mr. Dutkowsky holds a B.S. degree in Industrial
and Labor Relations from Cornell University. He is a member of the Board of
Directors of Network Associates, Inc.
Gerald Harrison has served on the Board of Directors of J.D. Edwards since
January 1997. He has been engaged in private research and writing since 1984.
From 1982 to 1984, he was President and Chief Executive Officer of Stearns-Roger
World Corporation, an engineering and construction firm, and for 14 years prior
to that, he served in various other positions. Mr. Harrison holds an L.L.B. from
the University of Colorado School of Law.
Delwin D. Hock has served on the Board of Directors of J.D. Edwards since
March 1997. He has been self-employed as a business consultant and private
investor since July 1997. He retired from his positions as Chief Executive
Officer of Public Service Company of Colorado, a utility services company, in
January 1996 and as Chairman of the Board of Directors in July 1997. From
September 1962 to January 1996, Mr. Hock held various management positions with
the Public Service Company, including Chief Financial Officer, President and
Chief Operating Officer, President and Chief Executive Officer, and Chairman.
Mr. Hock received his B.S. in accounting from the University of Colorado. He is
a member of the Board of Directors of Allied Motion Technologies, Inc. and
American Century Investors.
Richard E. Allen has served on the Board of Directors of J.D. Edwards since
September 1991. Mr. Allen has been Executive Vice President, Finance and
Administration, since May 2000. He has served as Chief Financial Officer and
Assistant Secretary of J.D. Edwards since January 1990. Prior to his promotion
to Executive Vice President, Mr. Allen served as Senior Vice President, Finance
and Administration, from November 1997 through April 2000, as Vice President,
Finance and Administration, from January 1990 through October 1997, and as
Treasurer from January 1990 to April 2000. Mr. Allen acted as Controller of J.D.
Edwards from August 1985 to September 1994 and as Secretary from March
A-5
1986 to January 1990. Mr. Allen holds a B.S. in Business Administration from
Colorado State University, and is a member of the Board of Directors of World
Technology Services, Inc.
Kathleen J. Cunningham has served on the Board of Directors of J.D. Edwards
since November 2002. Ms. Cunningham has been retired since August 2001. Ms.
Cunningham has held various senior executive positions with several high
technology companies, both publicly traded and privately held. She served as
Chief Financial Officer, Treasurer and Assistant Corporate Secretary of
Requisite Technology, Inc. from May 1999 to August 2001. From April 1992 to
April 1999, Ms. Cunningham acted as Chief Operating Officer, Chief Financial
Officer, Treasurer and Assistant Corporate Secretary of NxTrend Technology, Inc.
Ms. Cunningham was Vice President Finance and Administration, Chief Financial
Officer, Treasurer, and Assistant Corporate Secretary of Spatial Technology,
Inc. from 1987 to 1991. Ms. Cunningham served as Vice President Finance, Chief
Financial Officer and Treasurer of U.S. West Information Systems, Inc. from 1985
through 1987, and as Director and Assistant Treasurer, Financial Planning and
Cash Management for U.S. West, Inc. from 1983 to 1985. Prior to her tenure with
U.S. West, Ms. Cunningham acted as Vice President, Financial Planning and Vice
President, Financial Institutions, for Intrawest Financial Corporation from 1981
to 1983, and from 1974 to 1981 she served as Senior Vice President, Chief
Financial Officer, Treasurer and Assistant Corporate Secretary of GEFCO. Ms.
Cunningham received a B.A. in economics and political science from the
University of Wisconsin at Madison and an M.B.A. in Finance from the University
of Denver.
Robert C. Newman is one of the co-founders of the Company. He has been a
member of the Board of Directors of J.D. Edwards since August 1978. He is
currently on staff as a professor at the University of Denver and manages
private investments through his firm, Greenwood Gulch Ventures LLC. From August
1978 until June 1997, he served in a number of management roles with J.D.
Edwards, including Vice President of Complementary Technologies and Managing
Director of J.D. Edwards & Company, Ltd. (U.K.). Dr. Newman holds a B.S. in
industrial engineering from the University of California, Berkeley, an M.B.A.
from the University of California, Los Angeles, and a Ph.D. in management from
Golden Gate University.
Michael J. Maples has been a director of J.D. Edwards since January 1997.
Mr. Maples has been retired since July 1995 and is currently operating a ranch.
From April 1988 to July 1995, Mr. Maples held various management positions at
Microsoft Corporation, most recently as Executive Vice President of the
Worldwide Products Group. Prior to that, he served as a Director of Software
Strategy for IBM. Mr. Maples holds a B.S. in electrical engineering from
Oklahoma University and an M.B.A. from Oklahoma City University. He is a member
of the Board of Directors of Lexmark International, Inc. and NetIQ Corporation.
Trygve E. Myhren has been a director of J.D. Edwards since January 1997. He
is currently President of Myhren Media, Inc., a private investment firm
concentrating in media, telecommunications and software, and other enabling
technology. He is also a special limited partner of Megunticook Partners, LLC,
which manages early stage venture funds. From November 1990 to March 1996, he
served as President of The Providence Journal Company, a company that owned and
managed newspapers, broadcast television stations, cable television systems,
programming networks, and interactive and multimedia ventures. During this same
time, he was also Chief Executive Officer of King Holdings, an owner and manager
of broadcast and cable television properties. From 1981 to 1988, Mr. Myhren
served as Chairman and Chief Executive Officer of American Television and
Communications Corporation, a publicly traded subsidiary of Time, Inc. During
1986 and 1987, Mr. Myhren also served as Chairman of the National Cable
Television Association. Mr. Myhren has a B.A. in political science and
philosophy from Dartmouth College and an M.B.A. from the Amos Tuck School of
Business Administration at Dartmouth College. He is a member of the Board of
Directors of Advanced Marketing Services, Inc. and Dreyfus Founders Funds.
Leslie Wyatt has been Senior Vice President and Chief Marketing Officer
since February 2001. Mr. Wyatt most recently served as Senior Vice President,
Worldwide Marketing, of Harbinger Corporation, an e-commerce software provider
from October 1997 to January 2001. Before that he held
A-6
various positions during his 17-year employment at Texas Instruments, including
Director of Strategic Marketing for Texas Instruments Software. Mr. Wyatt holds
a B.S. in software design from Arizona State University and an M.S. in computer
science from Arizona State University.
Harry Debes has been Senior Vice President, Americas Sales and Consulting
Services, since August 2001. From May 2001 until August 2001, Mr. Debes served
as a consultant to J.D. Edwards. Mr. Debes joined J.D. Edwards from GEAC
Enterprise Solutions Americas, where he served as President of GEAC Americas
from March 1999 to May 2001. Prior to that, he spent more than eight years as
the managing director for GEAC Americas' Asia Pacific business. Mr. Debes holds
a B.A. in history from the University of Toronto and an M.B.A. with an
accounting major from McMaster University.
Richard Mathews has been Senior Vice President, International, since May
2001. From March 2000 to May 2001 he was Vice President and Managing Director of
J.D. Edwards Australia Pty Limited. He served as Chief Operating Officer, J.D.
Edwards New Zealand Limited, from November 1, 1998, until its acquisition by
J.D. Edwards in February 2000 and as General Manager of J.D. Edwards New Zealand
Limited from September 1994 through October 1998. Mr. Mathews holds a bachelor
of commerce in accounting and a B.S. in mathematics from the University of Otago
in New Zealand.
David Siebert has been Group Vice President, WorldSoftware, since June
2001. Mr. Siebert served as Group Vice President of Channel Operations from June
2000 to June 2001. From November 1997 to June 2000, he was Business Unit
Director of the United States Central area. From May 1996 to November 1997, he
was Industry Marketing Director and Director of Worldwide Marketing Consulting.
Mr. Siebert holds a B.A. in business administration from Bethel College and an
M.B.A. in operations management from DePaul University.
Michael Madden has been Senior Vice President, Software Engineering, since
January 2003 and Chief Technology Officer since August 2000. Prior to his
promotion to Senior Vice President, Mr. Madden served as Group Vice President
from September 2001 to January 2003. Prior to becoming Group Vice President, Mr.
Madden served as Vice President, Development Technologies, and Director of
Run-Time Technology and Design Tools. Mr. Madden joined J.D. Edwards in June
1998, coming from Digital Equipment Corporation, where he had spent the prior 12
years in various capacities, ending with a leadership position for DEC's mobile
computing offerings. He holds a master's degree in electrical engineering and a
bachelor's degree in applied mathematics, both from the University of New
Hampshire.
Pamela Saxton has been Vice President of Finance, Controller, and Chief
Accounting Officer since joining J.D. Edwards in September 1994. Ms. Saxton
spent the prior 20 years in various financial management positions with global
public companies, including Cyprus Amax Minerals Company, Amax Gold Inc., and
Petro-Lewis Corporation. Ms. Saxton holds a B.S. in accounting from the
University of Colorado.
Richard Snow, Jr., has been Vice President, General Counsel, and Secretary
since joining J.D. Edwards in January 1990. He holds a B.S. in business
administration from the University of California, Berkeley, and a J.D. from
California Western University Law School.
BOARD MEETINGS AND COMMITTEES
The Board of Directors met, either in person or by telephone, 28 times
during fiscal 2002, including 11 full Board meetings and 17 committee meetings.
Overall attendance at the Board and committee meetings was 94%. Attendance was
at least 82% for each director.
The Board of Directors has Audit, Compensation, Finance, and Governance and
Nominations Committees.
The Audit Committee reviews and reports to the Board on the quality and
performance of both the internal and external accountants and auditors, the
reliability of financial information, and the adequacy of financial controls and
policies. The committee also initiates and approves changes in any of these
areas when necessary. All members of the Audit Committee are independent (as
independence is defined in
A-7
Rule 4200(a)(15) of the National Association of Securities Dealers, Inc. listing
standards). The Audit Committee Report for fiscal 2002 and a copy of the Amended
and Restated Audit Committee Charter were included as Appendix A to the
Company's Proxy Statement for its Annual Meeting of Stockholders. The Audit
Committee held seven meetings in fiscal 2002.
The Compensation Committee reviews and reports to the Board on compensation
and personnel policies and plans, including management development and
succession plans, employee compensation and benefits, and administration of
stock plans. The Compensation Committee held seven meetings in fiscal 2002.
The Finance Committee reviews and reports to the Board on J.D. Edwards'
capital structure, capital expenditures, financing arrangements, risk
management, and long range financial planning. The Compensation Committee held
one meeting in fiscal 2002.
The Governance and Nominations Committee acts on behalf of the Board in
between Board meetings on matters regarding corporate governance and nominations
for membership to the Board. The Committee then reports any actions taken at the
next regular Board meeting. The purpose of the Committee is to ensure that the
Board of Directors is properly constituted to meet its fiduciary obligations to
shareholders and the Company and that the Company has and follows appropriate
governance standards. The Compensation Committee held two meetings in fiscal
2002.
A-8
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning total
compensation received by the Chief Executive Officers and each of the other four
most highly compensated executive officers who served in those capacities during
fiscal 2002, or the Named Executive Officers, for services rendered to J.D.
Edwards during the last three fiscal years. Robert M. Dutkowsky was appointed by
the Board of Directors to the positions of President and Chief Executive Officer
as of January 2, 2002, replacing C. Edward McVaney. Information pertaining to
the Named Executive Officers' Employment Agreements with the Company is provided
below under the heading "Agreements with Certain Executive Officers."
<Table>
<Caption>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ---------------------------
SECURITIES
BASE OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS COMPENSATION
- --------------------------- ---- -------- -------- ------------ ------------ ---------- ------------
Richard E. Allen, Executive
Vice........................... 2002 $346,000 $710,630(1) -- -- -- --
President and Chief
Financial.................... 2001 331,000 24,450 -- -- 84,800 --
Officer........................ 2000 297,815 57,289 -- -- 250,000 --
John H. Bonde, Former
Executive...................... 2002 $500,000 $202,000 -- $ 237,400(3) -- --
Vice President and Chief....... 2001 371,212 -- $ 5,122 -- 250,000 --
Operating Officer(2)........... -- -- -- -- -- -- --
Harry Debes, Senior Vice
President,..................... 2002 $350,000 $145,500 -- -- -- --
Americas Sales(4).............. 2001 72,917 131,250 -- -- 80,000 $118,086(5)
-- -- -- -- -- -- --
Robert M. Dutkowsky, President
and............................ 2002 $539,205 $487,500 $181,119(7) $1,589,000(8) 1,600,000 --
Chief Executive Officer and.... -- -- -- -- -- -- --
Chairman(6).................... -- -- -- -- -- -- --
Michael R. Madden, Senior Vice... 2002 $290,000 $149,200(9) -- -- -- --
President, Software
Engineering.................. 2001 278,750 108,750 -- -- 38,500 --
and Chief Technology Officer... 2000 211,083 106,644 -- -- 243,000 --
C. Edward McVaney, Former........ 2002 $ 24,620 -- -- -- -- $125,000(10)
President and Chief
Executive.................... 2001 120,000 $ 4,800 -- -- -- --
Officer and Chairman........... 2000 120,000 -- -- -- -- --
</Table>
- ---------------
(1) Includes Stay Bonus paid to Mr. Allen under the terms of his Employment
Agreement in consideration for his remaining in the employment of the
Company for the Initial Employment Term of 2 years. See description of Mr.
Allen's Employment Agreement under "Agreements with Certain Executive
Officers."
(2) Mr. Bonde assumed the positions of Executive Vice President and Chief
Operating Officer of the Company during fiscal 2001. Mr. Bonde received no
compensation from the Company prior to that time. Mr. Bonde resigned from
the Company as of December 31, 2002.
(3) As of October 31, 2002, Mr. Bonde held restricted stock purchase rights
with respect to 20,000 shares of Company Common Stock, valued at $237,000.
The Company waived all restrictions related to the sale of the stock by Mr.
Bonde pursuant to the terms of his Separation Agreement, effective as of
December 31, 2002.
(4) Mr. Debes assumed the position of Senior Vice President, Americas during
fiscal 2001. Mr. Debes provided services to the Company on a consulting
basis from May 20, 2001 through August 15, 2001. Mr. Debes was neither an
employee nor a consultant to the Company and received no compensation from
the Company prior to May 2001.
(5) Compensation paid to Mr. Debes from May 20, 2001 through August 15, 2001
for services provided to the Company on a consulting basis.
(6) Mr. Dutkowsky assumed the positions of President and Chief Executive
Officer of the Company during fiscal 2002. Mr. Dutkowsky received no
compensation from the Company prior to that time.
A-9
(7) Includes $80,411 reimbursed to Mr. Dutkowsky for payment of taxes, and
$90,708 reimbursed to Mr. Dutkowsky for payment of commuting and related
expenses, and $10,000 reimbursed to Mr. Dutkowsky for payment of legal
fees.
(8) As of October 31, 2002, Mr. Dutkowsky held restricted stock purchase rights
with respect to 100,000 shares of Company Common Stock, valued at
$1,185,000. My. Dutkowsky may purchase the restricted stock for $.01 per
share. The restrictions lapsed as to 50,000 shares on January 2, 2003, and
will lapse as to 50,000 shares on January 2, 2004.
(9) Includes Retention Bonus paid to Mr. Madden under the terms of his
Employment Agreement in consideration for his remaining in the employment
of the Company for the initial term of 3 years.
(10) Amount paid to Mr. McVaney pursuant to an arrangement in connection with
his resignation as President and Chief Executive Officer in January 2002.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth, as to the Named Executive Officers,
information concerning stock options granted during fiscal 2002.
<Table>
<Caption>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
--------------------------------------------------- AT ASSUMED ANNUAL RATES OF
PERCENT OF STOCK PRICE APPRECIATION FOR
NO. OF TOTAL OPTIONS OPTION TERM(4)
SECURITIES GRANTED TO -----------------------------
UNDERLYING EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICE PER EXPIRATION
NAME GRANTED(1) YEAR(2) SHARE DATE(3) 5% 10%
- ---- ---------- ------------- --------- ---------- ------------- -------------
Richard E. Allen.......... -- -- -- -- -- --
John H. Bonde............. -- -- -- -- -- --
Harry Debes............... -- -- -- -- -- --
Robert M. Dutkowsky(5).... 500,000 16.10% $15.90 1/2/10 $3,795,771 $9,091,531
1,100,000 35.43% 15.90 1/2/10 8,350,696 20,001,368
Michael R. Madden......... -- -- -- -- -- --
C. Edward McVaney......... -- -- -- -- -- --
</Table>
- ---------------
(1) The options in this table are nonqualified stock options granted under the
J.D. Edwards 1997 Equity Incentive Plan and have exercise prices equal to
the closing price of J.D. Edwards Common Stock on the date of grant. Except
as otherwise noted, all options have 8-year terms and vest 25% on the first
anniversary date of the grant and 1/48th each month thereafter.
(2) J.D. Edwards granted options to purchase 3,104,752 shares of Common Stock to
employees in fiscal 2002.
(3) The options in this table may terminate before their expiration as a result
of the termination of the optionee's status as an employee or upon the
optionee's disability or death.
(4) Under rules promulgated by the SEC, the amounts in these two columns
represent the hypothetical gain or option spread that would exist for the
options in this table based on an assumed stock price appreciation from the
date of grant until the end of the options' eight-year term at assumed
annual rates of 5% and 10%. The 5% and 10% assumed annual rates of
appreciation are specified in SEC rules and do not represent J.D. Edwards'
estimate or projection of future stock price growth. There can be no
assurance that the actual stock price appreciation over the 8-year option
term will be at the assumed 5% and 10% annual rates of compounded stock
appreciation or at any other defined rate.
(5) See discussion of Mr. Dutkowsky's Employment Agreement under "Agreements
with Certain Executive Officers" for a description of the terms of Mr.
Dutkowsky's stock option grants.
A-10
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth, as to the Named Executive Officers, certain
stock option information concerning the number of shares subject to both
exercisable and unexercisable stock options and the value of the options as of
October 31, 2002.
<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
Richard E. Allen......... 0 0 578,687 63,934 $1,688,386 $ 0
John H. Bonde............ 0 0 62,500 187,500 0 0
Harry Debes.............. 0 0 28,333 51,667 24,366 44,433
Robert M. Dutkowsky...... 0 0 429,688 1,170,312 0 0
Michael R. Madden........ 0 0 204,427 90,073 49,300 32,300
C. Edward McVaney........ -- -- -- -- -- --
</Table>
- ---------------
(1) Based on the fair market value of J.D. Edwards Common Stock at fiscal year
end ($11.86) less the exercise price payable for the shares.
DIRECTOR COMPENSATION
J.D. Edwards compensates each of its directors who is not an employee of
J.D. Edwards or its subsidiaries as follows:
- $15,000 per year as an annual retainer.
- $1,500 for each Board meeting attended.
- $500 for each Board conference call attended.
- $1,500 for each committee meeting attended (directors do not receive a
fee for a committee meeting attended that is held in conjunction with a
Board meeting).
- Committee chairmen received an additional $5,000.
Additionally, non-employee directors may elect to receive stock options,
instead of the cash amounts described above, to purchase shares of J.D. Edwards
common stock having a fair market value equal to the cash compensation they
otherwise would have received. Only one non-employee director in fiscal 2002
elected to receive stock options in lieu of cash compensation. Non-employee
directors are also reimbursed for expenses incurred in attending meetings. J.D.
Edwards does not separately compensate directors who are employees of J.D.
Edwards or its subsidiaries.
J.D. Edwards also grants each non-employee director non-qualified stock
options to purchase 35,000 shares of J.D. Edwards common stock at the Annual
Meeting at which the director is first elected to the Board and non-qualified
stock options to purchase 10,000 shares of J.D. Edwards common stock each
successive year he or she remains a director. Under the 1997 J.D. Edwards Equity
Incentive Plan (the "1997 Plan"), these shares vest 25% on the first anniversary
date of the grant and 1/48 each month thereafter. Vesting continues whether or
not a non-employee director remains on the Board, and the options remain
exercisable for their full term of 8 years. The exercise price for all options
granted to non-employee directors is equal to the closing price of the common
stock on the date of grant. Non-employee directors are also eligible to receive
discretionary grants under the 1997 Plan. No discretionary grants were made to
directors during fiscal 2002. See Proposal No. 2, "Approval of the 2003 J.D.
Edwards & Company Equity Incentive Plan," for a description of the terms of
options to be granted under the proposed 2003 J.D. Edwards & Company Equity
Incentive Plan, if approved by stockholders.
A-11
AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS
J.D. Edwards entered into an Employment Agreement with Richard E. Allen
("Mr. Allen"), dated August 1, 2000 but effective as of May 1, 2000, for an
initial term (the "Initial Employment Term") of two years, which automatically
renewed for an additional term of one year on May 1, 2002. Under the terms of
his renewed agreement, Mr. Allen serves as Executive Vice President, Finance and
Administration and Chief Financial Officer. Mr. Allen receives an annual base
salary of $346,000 as well as annual bonus compensation of up to seventy-five
percent (75%) of his base salary based upon achievement of certain objectives
determined and approved by the Compensation Committee of the Board. Mr. Allen
was awarded stock options to purchase 225,000 shares of J.D. Edwards common
stock, at an exercise price of $13.0625 per share, the closing price of the
common stock as of the date of the grant, when he initially entered into his
Employment Agreement with the Company. Those options vested one hundred percent
(100%) on May 1, 2002. Upon completion of the Initial Employment Term during
fiscal 2002, Mr. Allen received a Stay Bonus equal to 100% of his on target
earnings for the first year of the Initial Employment Term. Mr. Allen is
entitled to severance payments in the event of his termination of employment for
reasons other than for Cause, as defined in his Agreement. His Agreement will
automatically renew for successive one-year periods unless either J.D. Edwards
or Mr. Allen provides the other with written notice of intent not to renew no
later than 30 days prior to the end of any period. Salary and bonus
compensation, as well as subsequent option grants, if any, for renewal periods
will be established by a written addendum to Mr. Allen's Employment Agreement to
be approved by the Compensation Committee of the Board. Mr. Allen's Employment
Agreement was amended on June 1, 2003 as set forth in Exhibit (e)(7), which is
hereby incorporated by reference.
J.D. Edwards entered into an Employment Agreement with Harry Debes ("Mr.
Debes"), dated May 4, 2001 but effective as of August 16, 2001. Under the terms
of his Agreement, Mr. Debes serves as Senior Vice President, Americas Sales and
Consulting Services. Mr. Debes receives an annual base salary of $350,000, along
with certain bonus compensation of up to seventy-five percent (75%) of his base
salary based upon achievement of certain objectives determined and approved by
the Compensation Committee of the Board. Mr. Debes was awarded stock options to
purchase 80,000 shares of J.D. Edwards common stock on May 14, 2001, at an
exercise price of $11.00 per share, the closing price of the common stock as of
the date of the grant. In addition, Mr. Debes is entitled to receive a grant of
options to purchase 50,000 shares of common stock, to be granted at fair market
value, on the first day on which the price of J.D. Edwards common stock is at or
above $24.00, as well as a grant of options to purchase 50,000 shares of common
stock, to be granted at fair market value, on the first day on which the stock
price is at or above $36.00. In the event Mr. Debes' employment with the Company
terminates, all unvested options will be immediately forfeited, and Mr. Debes
will have a period of three months following termination of employment to
exercise any vested, but unexercised, options. Mr. Debes is eligible to
participate in all employee benefits provided by the Company. In the event Mr.
Debes' employment is terminated by the Company for Performance or Disability, as
defined in his Agreement, Mr. Debes will be entitled to receive severance pay in
the amount of his then current twelve months base salary, conditioned upon Mr.
Debes signing a Separation Agreement with the Company in the form appended to
his Employment Agreement. Should Mr. Debes voluntarily resign or be terminated
for cause, as defined in his Employment Agreement, he will not be entitled to
any severance pay. Mr. Debes' Agreement will automatically renew for successive
one-year periods unless either J.D. Edwards or Mr. Debes provides the other with
written notice of intent not to renew no later than 30 days prior to the end of
any period.
J.D. Edwards entered into an Employment Agreement with Robert M. Dutkowsky
("Mr. Dutkowsky"), dated and effective as of January 2, 2002, for a term of not
less than two years. Under the terms of his Agreement, Mr. Dutkowsky serves as
the President and Chief Executive Officer of the Company. Mr. Dutkowsky was
appointed to the Board of Directors as of January 2, 2002, and was appointed
Chairman of the Board at the Annual Meeting on March 26, 2002. Mr. Dutkowsky
receives an annual base salary of $650,000, as well as bonus compensation of up
to one hundred percent (100%) of his annual base salary, contingent upon Mr.
Dutkowsky's continued employment with the Company and achievement of certain
objectives determined and approved by the Compensation Committee of the Board.
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Mr. Dutkowsky received guaranteed bonus payments of $162,500 on each of March
31, June 30, September 30, and December 31, 2002. In the event of Mr.
Dutkowsky's death or disability, as defined in the Employment Agreement, or in
the event he is terminated without cause, also as defined in his Agreement, Mr.
Dutkowsky will receive certain guaranteed bonus payments. Mr. Dutkowsky was
awarded stock options to purchase 1,100,000 shares of J.D. Edwards common stock
on January 2, 2002, which vest as follows: (a) 275,000 on January 2, 2002; and
(b) 17,187.5 on the last day of each month, beginning in February, 2002. Mr.
Dutkowsky was also awarded additional stock options to purchase 500,000 shares
of J.D. Edwards common stock on January 2, 2002, which vest in full on the fifth
anniversary of the effective date of the Agreement, or will vest earlier as
follows: (a) 250,000 on the date on which the average fair market value of J.D.
Edwards common stock, as defined in the Agreement, over any sixty consecutive
trading days has reached (or exceeded) two times the original per share exercise
price of the stock options; and (b) 250,000 on the date on which the average
fair market value over any sixty consecutive trading days has reached (or
exceeded) three times the original per share exercise price of the stock
options. The exercise price of all of the above stock options is $15.90 per
share, the closing price of the common stock as of the date of the grant. In
addition, Mr. Dutkowsky was granted a right to purchase 100,000 shares of
restricted common stock of the Company at a price of $.01 per share. The
restrictions on Mr. Dutkowsky's restricted stock lapsed as to 50,000 shares on
January 2, 2003, and the restrictions on the remaining 50,000 shares will lapse
on January 2, 2004. Vesting is contingent upon his continued employment with the
Company. If Mr. Dutkowsky voluntarily resigns from employment with the Company
or is terminated for Cause as defined in his Agreement at any time during the
initial employment term, his unvested stock options will be cancelled as of the
date of his resignation or termination and Mr. Dutkowsky will have the right to
exercise only those options which are vested as of the date of his resignation
or termination. If Mr. Dutkowsky's employment is terminated by the Company
without Cause or because of Mr. Dutkowsky's death or disability, all of his
vested stock options and restricted stock, as well as any stock options or
restricted stock that are due to vest within one year after such termination of
employment, will become vested on the date of termination. In addition, if any
of the share price goals of the stock options are attained within sixty days
after such termination of employment, then the applicable stock options will
vest on the date the goals are attained. Finally, if Mr. Dutkowsky's employment
is terminated without Cause in connection with a Change in Control, as defined
in his Agreement, all of Mr. Dutkowsky's unvested stock options will fully vest
and the restrictions on his restricted stock will lapse on the date of
termination of his employment. Mr. Dutkowsky will have a pe riod of six months
following his termination of employment within which to exercise his vested
stock options. Mr. Dutkowsky may participate in all employee benefits provided
by the Company. Mr. Dutkowsky will be entitled to receive severance pay in an
amount equal to two years of his then current base salary and two years of his
Target Bonus, as defined in his Agreement, in the event his employment is
terminated without Cause, contingent upon his entering into a Separation
Agreement in the form appended to his Employment Agreement. Mr. Dutkowsky's
Employment Agreement was amended on June 1, 2003 as set forth in Exhibit (e)(6),
which is hereby incorporated by reference.
J.D. Edwards entered into an Employment Agreement with Michael R. Madden
("Mr. Madden"), effective as of August 1, 2000 (the "Effective Date"), for a
period of not less than three years. Under the terms of his Employment
Agreement, Mr. Madden serves as Senior Vice President, Software Engineering and
Chief Technology Officer. Mr. Madden receives an annual base salary of $290,000,
as well as certain bonus compensation of up to 40% of his base salary contingent
upon his achievement of certain objectives as determined by the Compensation
Committee of the Board. In addition, under the terms of the Employment
Agreement, the Company agreed to pay a total Retention Bonus of $275,000 to Mr.
Madden, payable incrementally over the term of his Agreement as follows: 25%
upon execution of the Agreement by Mr. Madden and 25% on each of the first,
second, and third anniversaries of the Effective Date. Mr. Madden was awarded
stock options to purchase 150,000 shares of J.D. Edwards common stock when he
initially entered into his Employment Agreement with the Company, at an exercise
price of $13.063 per share, the closing price of the common stock as of the date
of the grant. Those options vested 25% on the Effective Date, and have continued
to vest at a rate of 1/36 per month thereafter. Mr. Madden is eligible to
participate in all employee benefits provided by the Company to its employees.
Mr. Madden is entitled
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to receive severance payments in the amount of one year's then current base
salary in the event of termination of his employment for Performance or
Disability, as defined in his Agreement. If Mr. Madden's employment is
terminated other than for Cause, Performance, or Disability, each as defined in
his Agreement, he will be entitled to receive severance pay equal to one year's
base salary and bonus compensation. Mr. Madden's Agreement will automatically
renew for successive one-year periods unless either J.D. Edwards or Mr. Madden
provides the other with written notice of intent not to renew no later than 30
days prior to the end of any period.
J.D. Edwards maintains a Management Change in Control Plan in which the
executive officers participate. The Company's Management Change in Control Plan
provides for severance payments to be made to participants under circumstances
which, following a change in control of J.D. Edwards, as defined in the Plan,
are deemed to be an involuntary termination of such participant's employment
with J.D. Edwards. The severance payments are determined based upon a formula
that takes into account each participant's annual compensation at the time of
involuntary termination and the average bonus received by a participant over the
preceding three years.
REPORT OF THE J.D. EDWARDS & COMPANY BOARD OF DIRECTORS
COMPENSATION COMMITTEE FOR THE FISCAL YEAR ENDED OCTOBER 31, 2002
The Compensation Committee of the Board has responsibility to review and
report to the Board on compensation and personnel policies, programs and plans,
including management development and succession plans, employee compensation and
benefits, and administration of stock plans. The purpose of this report is to
summarize the principles, specific program objectives, and other factors
considered by the Committee in reaching its determinations regarding executive
compensation.
EXECUTIVE COMPENSATION POLICIES
The objectives of J.D. Edwards' executive compensation program are to:
- Attract, retain, and motivate highly qualified executive talent.
- Reward executives based on J.D. Edwards' performance.
- Align the compensation and interests of executive officers with the
long-term interests of J.D. Edwards stockholders.
The Company's executive compensation program consists of base salary, cash
bonuses, long-term incentives in the form of stock options and restricted stock
purchase rights, and the benefit programs generally available to all full-time
employees.
The Compensation Committee reviews the base salaries of executive officers
annually. In its recommendation of base salary adjustments, the Committee
considers individual performance and experience, relative scope of
responsibility, and company performance, as well as the base salaries paid to
other executives in the competitive marketplace.
J.D. Edwards offers a Company Bonus Plan (the "Bonus Plan"), an annual
profit sharing plan designed to reward employees with bonus compensation of up
to a certain predetermined percentage of their base compensation when profits
exceed predefined thresholds. Under this Bonus Plan, participants are eligible
to receive bonus awards equal to a certain percentage of their base
compensation. The funding of the pool for this Bonus Plan is contingent upon the
Company's achievement of certain predefined quarterly and annual profit margin
thresholds. Funding is 50% formula driven and 50% discretionary. The Bonus Plan
pool was funded and bonuses were paid at 50% for fiscal 2002 based upon
achievement of profit margin thresholds.
The Compensation Committee has approved a Performance Based Bonus Plan
effective November 1, 2002, subject to approval of the stockholders of the
Company at the Annual Meeting. Under this
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Performance Plan, incentive compensation paid would be performance based for
purposes of exemption from the limitations of Section 162(m) of the Internal
Revenue Code, as amended (the "Code").
Ownership of J.D. Edwards common stock is a key and fundamental element of
executive compensation. Executive officers, as well as other employees, are
eligible to receive stock option and restricted stock purchase rights grants
under the J.D. Edwards 1997 Equity Incentive Plan. This plan permits the Board
or the Compensation Committee to grant stock options to officers and employees
on terms the Board or the Committee may determine. Options granted generally
have a term of 8 years and vest 25% at the end of the first year and 1/48th each
month thereafter until fully vested four years from the date of grant. Options
to purchase a total of 3,104,752 shares were granted to employees in fiscal
2002.
The Compensation Committee has approved a new 2003 Equity Incentive Plan,
subject to approval of the stockholders of the Company at the Annual Meeting. If
the stockholders approve the 2003 Equity Incentive Plan, it will replace the
Company's 1997 Equity Incentive Plan, which will be terminated except with
respect to outstanding awards previously granted thereunder.
The J.D. Edwards 1997 Employee Stock Purchase Plans for U.S. and Non-U.S.
Employees permit employees to acquire J.D. Edwards common stock through payroll
deductions and promote broad-based equity participation throughout the company.
The Committee believes that the stock plans align the interests of employees
with the long-term interests of stockholders.
J.D. Edwards maintains the J.D. Edwards & Company Retirement Savings Plan
to provide retirement benefits to its employees. The 401(k) portion of the
Retirement Savings Plan provides benefits through tax deferred salary deductions
for its U.S. employees who meet certain eligibility requirements. J.D. Edwards
generally matches 50% of an employee's eligible contributions up to a maximum
match of 3% of eligible compensation. This match is discretionary. The profit
sharing contribution portion of the Retirement Savings Plan is designed to be
invested primarily in J.D. Edwards common stock for the benefit of the U.S.
employees. Company contributions are determined by the Board, in its discretion,
and, if made, may be in the form of cash or J.D. Edwards common stock.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR FISCAL 2002
Robert M. Dutkowsky has served as President and Chief Executive Officer of
J.D. Edwards since January 2, 2002. Mr. Dutkowsky earned a base salary of
$539,205 in fiscal 2002, which took into consideration factors including his
performance and experience, scope of responsibility, and comparable salaries
paid in the competitive marketplace. Mr. Dutkowsky received $487,500 in cash
incentives in fiscal 2002, which were conditioned upon his continued employment
with the Company. The Company also reimbursed Mr. Dutkowsky for certain
expenses. See "Summary Compensation Table," for further details of the
compensation paid to Mr. Dutkowsky during fiscal 2002. Mr. Dutkowsky received
grants of stock options and restricted stock purchase rights as part of his
Employment Agreement with the Company. The terms of the stock option and
restricted stock purchase rights grants are detailed in the discussion of Mr.
Dutkowsky's Employment Agreement, under the heading "Agreements with Certain
Executive Officers." Mr. Dutkowsky did not participate in the Company's annual
grant of stock options which occurred in December 2002. Also, during fiscal
2002, C. Edward McVaney served as President and Chief Executive Officer from
November 1, 2001 until January 2, 2002. Mr. McVaney earned a base salary of
$24,620 for the portion of fiscal 2002 during which he served. Mr. McVaney did
not participate in J.D. Edwards' bonus incentive compensation plan. Mr. McVaney
received no option grants during fiscal 2002. Mr. McVaney resigned from his
positions as President and Chief Executive Officer of the Company as of January
2, 2002 and received separation pay of $125,000.
Respectfully submitted by the members of the Compensation Committee of the
Board of Directors.
Trygve Myhren, Chairman
Michael J. Maples
A-15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
J.D. Edwards' Compensation Committee was formed to review and report to the
Board on compensation and personnel policies, programs and plans, including
management development and succession plans, employee compensation and benefits,
and administration of stock plans. The Committee is currently composed of Mr.
Myhren and Mr. Maples. No interlocking relationship exists between any member of
the Board or Compensation Committee and the board of directors or compensation
committee of any other company, nor has any interlocking relationship existed in
the past.
A-16
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return to stockholders on
J.D. Edwards common stock with the cumulative total return of the S&P 500 Index
and the Morgan Stanley Technology Index. The graph assumes that $100 was
invested on October 31, 1997 in J.D. Edwards common stock, the S&P 500 Index,
and the Morgan Stanley Technology Index, including reinvestment of dividends. No
dividends have been declared or paid on J.D. Edwards common stock. Note that
historic stock price performance is not necessarily indicative of future stock
price performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG J.D. EDWARDS & COMPANY, THE S&P 500 INDEX
AND THE MORGAN STANLEY TECHNOLOGY INDEX
(STOCK PERFORMANCE GRAPH)
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires J.D. Edwards'
directors, executive officers, and holders of more than 10% of J.D. Edwards
common stock to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of common stock and other
equity securities of J.D. Edwards. Except as described below, based solely upon
a review of reports submitted and representations made to J.D. Edwards, we
believe that, during fiscal 2002, our executive officers, directors and 10%
stockholders complied with all applicable Section 16(a) filing requirements
except that Mr. Mathews filed one late report on Form 4 detailing option
exercises and sales which occurred in March 2002, Mr. McVaney filed one late
report on Form 5 detailing sales which took place in February and March 2002,
and Jan Zapapas, a former director of the Company, filed an Initial Statement of
Beneficial Ownership on Form 3 late in July 2002.
A-17
<Table>
2725 Sand Hill Road
Suite 200
Menlo Park CA 94025
tel 650 234 5500
800 900 8930
</Table>
(MORGAN STANLEY LOGO)
ANNEX B
June 15, 2003
Board of Directors
J.D. Edwards & Company
One Technology Way
Denver, CO 80237
Members of the Board:
We understand that J.D. Edwards & Company ("J.D. Edwards" or the
"Company"), PeopleSoft, Inc. ("PeopleSoft") and Jersey Acquisition Corporation,
a wholly owned subsidiary of PeopleSoft ("Merger Sub"), propose to enter into an
Amended and Restated Agreement and Plan of Merger, substantially in the form of
the draft dated June 15, 2003 (the "Merger Agreement") to amend and restate that
Merger Agreement dated June 1, 2003, among J.D. Edwards, PeopleSoft and Merger
Sub (the "Original Merger Agreement"). The Merger Agreement which provides,
among other things, for the commencement by Merger Sub of an exchange offer (the
"Exchange Offer") for all outstanding shares of common stock, par value $0.001
per share, of J.D. Edwards (the "J.D. Edwards Common Stock") for value equal to
$7.05 in cash plus 0.43 shares of common stock par value $0.001 per share, of
PeopleSoft (the "PeopleSoft Common Stock") for each share of J.D. Edwards Common
Stock, which value will consist of, at the holder's election, either cash or
PeopleSoft Common Stock, pursuant to the formula set forth in the Merger
Agreement and is subject to, among other things, pro ration between cash and
PeopleSoft Common Stock (collectively, the "Merger Consideration") and, the
subsequent merger (the "Merger") of Merger Sub with and into the Company
followed by a merger of the Company with and into PeopleSoft. Pursuant to the
Merger, the Company will become a wholly owned subsidiary of PeopleSoft and each
issued and outstanding share of J.D. Edwards Common Stock, other than shares
held in treasury or held by PeopleSoft or Merger Sub, or as to which dissenters'
rights have been perfected, will be converted into the right to receive $7.05 in
cash and 0.43 shares of PeopleSoft Common Stock. The terms and conditions of the
Exchange Offer and Merger (collectively, the "Transaction") are more fully set
forth in the Merger Agreement, including, among other things, the adoption of an
alternative Merger structure in the event that the required tax opinions are not
obtained in connection with the foregoing structure.
You have asked for our opinion as to whether the Merger Consideration to be
received by holders of shares of J.D. Edwards Common Stock pursuant to the
Merger Agreement is fair from a financial point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and
other business and financial information of J.D. Edwards and PeopleSoft,
respectively;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning J.D. Edwards and PeopleSoft,
prepared by the managements of J.D. Edwards and PeopleSoft, respectively;
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(MORGAN STANLEY LOGO)
(iii) discussed certain strategic, financial and operational benefits
anticipated from the Transaction with the managements of J.D. Edwards and
PeopleSoft and reviewed estimates of the strategic, operational and
financial benefits, including, among other things, cost savings anticipated
from the Transaction prepared by the managements of J.D. Edwards and
PeopleSoft;
(iv) reviewed the pro forma impact of the Transaction on the combined
company's financial performance, including cash earnings per share, defined
as earnings excluding non-cash charges and purchase accounting adjustments;
(v) discussed the past and current operations and financial condition
and the prospects of J.D. Edwards and PeopleSoft with senior executives of
J.D. Edwards and PeopleSoft;
(vi) reviewed the reported prices and trading activity for J.D.
Edwards Common Stock and PeopleSoft Common Stock;
(vii) compared the financial performance of J.D. Edwards and
PeopleSoft and the prices and trading activity of the J.D. Edwards Common
Stock and PeopleSoft Common Stock with that of certain other comparable
publicly-traded companies and their securities;
(viii) reviewed the financial terms, to the extent publicly
available, of certain comparable transactions;
(ix) discussed with the management of J.D. Edwards their strategic
rationale for the Transaction and certain alternatives to the Transaction;
(x) participated in discussions and negotiations among
representatives of J.D. Edwards, PeopleSoft and their financial and legal
advisors;
(xi) reviewed the Offer to Purchase on Schedule TO, dated June 9,
2003, as amended (the "Oracle Offer") filed by Oracle Corporation
("Oracle") and discussed the Oracle Offer with representatives of
PeopleSoft, J.D. Edwards and their financial and legal advisors;
(xii) reviewed the Merger Agreement, the Original Merger Agreement
and certain related documents;
(xiii) performed such other analyses and considered such other
factors as we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the internal financial statements, including
certain estimates relating to the financial and operational benefits anticipated
from the Transaction, we have assumed that they were reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
future financial performance of J.D. Edwards and PeopleSoft, respectively. In
addition, we have assumed that the Transaction will be consummated in accordance
with the terms set forth in the Merger Agreement, including among other things,
that the Transaction will be treated as a tax free reorganization pursuant to
the Internal Revenue Code of 1986, as amended (the "Code") or a tax free
transaction governed by Section 351 of the Code. We note that on June 6, 2003,
Oracle announced its intention to launch a tender offer for all outstanding
PeopleSoft Common Stock and filed the Oracle Offer on June 9, 2003. In addition,
we note that on June 13, 2003, the Board of Directors of PeopleSoft rejected the
Oracle Offer.
We have relied upon, without independent verification, the assessment by
the managements of J.D. Edwards and PeopleSoft of: (i) the strategic, financial
and other benefits expected to result from the Transaction; (ii) the timing and
risks associated with the integration of J.D. Edwards and PeopleSoft; and (iii)
the validity of, and risks associated with, J.D. Edwards's and PeopleSoft's
existing and future
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technologies, intellectual property, products, services and business models. We
have not made any independent valuation or appraisal of the assets, liabilities
or technology of J.D. Edwards and PeopleSoft, nor have we been furnished with
any such appraisals. Our opinion is necessarily based on financial, economic,
market and other conditions as in effect on, and the information made available
to us as of, the date hereof. In arriving at our opinion, we were not authorized
to solicit, and did not solicit, interest from any party with respect to the
acquisition of the Company or any of its assets.
We have acted as financial advisor to the Board of Directors of J.D.
Edwards in connection with this transaction and will receive a fee for our
services. In the ordinary course of our business we may actively trade the
securities of J.D. Edwards, PeopleSoft and Oracle for our own account and for
the accounts of our customers and, accordingly, may at any time hold a long or
short position in such securities. In the past, Morgan Stanley & Co.
Incorporated ("Morgan Stanley") and its affiliates have provided financial
advisory and financing services for the Company and for Oracle and have received
fees for the rendering of these services. Additionally, in the past, Morgan
Stanley has provided financial advisory services for PeopleSoft but did not
receive a fee for these services.
It is understood that this letter is for the information of the Board of
Directors of J.D. Edwards and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its entirety
in any filing made by J.D. Edwards in respect of this transaction with the
Securities and Exchange Commission. In addition, this opinion does not in any
manner address the prices at which the PeopleSoft Common Stock will trade
following the consummation of the Transaction, and Morgan Stanley expresses no
opinion or recommendation as to how the stockholders of J.D. Edwards should
tender or elect in connection with the Transaction nor how the stockholders of
J.D. Edwards should vote at the stockholders' meeting, if any, to be held in
connection with the Transaction.
Based on and subject to the foregoing, we are of the opinion on the date
hereof that the Merger Consideration to be received by holders of J.D. Edwards
Common Stock pursuant to the Merger Agreement is fair from a financial point of
view to such holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ NICHOLAS DEJ. OSBORNE
------------------------------------
Nicholas deJ. Osborne
Managing Director
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